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This article provides a survey of China's initial public offering (IPO) market, focusing on IPO pricing, bids and allocation, and aftermarket trading. We show that strict regulations result in suppressed IPO offer prices and high initial returns, causing a high cost of going public. Investors treat IPOs as lotteries with extremely high short-term returns, with little attention to the long term. The auction selling method, however, works in the way it is supposed to. Mutual funds bid in a more informative way than other investors, and their advantages are unlikely to be due to underwriters' preferential treatment. We also discuss the latest registration-system reform. [ABSTRACT FROM AUTHOR]

This paper studies the impact of nonstrategic seller-induced delays on the buyer's willingness to pay in price negotiations. Price negotiations are often characterized by either the buyer or the seller introducing delays and interruptions. In the bargaining literature, time delays are considered costly and could lower the consumer's incentives to engage in bargaining and also reduce the available surplus if the buyer and the seller engage in bargaining. In this paper, we explore the possibility that unanticipated delays from the seller can change the consumer's willingness to pay (WTP) for the product. In a set of laboratory experiments, we find evidence that, relative to fixed pricing, bargaining can result in an increase in WTP and, consequently, in purchase likelihood. In particular, we find that the increase in WTP exists only when the seller delays the response in an unanticipated manner. Based on the recovered distributions of WTP, we find that the increase in profits under bargaining because of the increase in WTP can be sizable as compared with the gains from pure price discrimination. The results provide evidence that a seller can potentially benefit from manipulating response time but only when such manipulation is not anticipated by the consumer. We provide preliminary evidence of the underlying mechanisms and discuss the implications of these findings for researchers as well as practitioners. History: K. Sudhir served as the senior editor. Supplemental Material: The web appendix and data files are available at https://doi.org/10.1287/mksc.2021.0296. [ABSTRACT FROM AUTHOR]

Local governments mandated with establishing a voucher market can have multiple options for the specific type of voucher model they choose. What determines the local choice of voucher model in such a multi-option scenario? This article focuses on the importance of market capacity and theoretically argues that market capacity is shaped not only by private providers' production conditions but also by the wider private market attractiveness. Empirically, the relationship between market capacity and local governments' choice of voucher model is tested in a voucher market for homecare for the elderly. Based on regression analysis, the article finds that higher market capacity, not least in terms of higher market attractiveness, increases the likelihood of choosing a voucher model with competitive tendering compared to a voucher model based on fixed price and quality terms. [ABSTRACT FROM AUTHOR]

Considering the characteristics of long-range correlations in financial markets, the issue of valuing geometric average Asian options is examined, assuming that the variations of the underlying asset follow the mixed sub-fractional Brownian motion, and the dynamics of short-term interest rate satisfies the mixed sub-fractional Vasicek model. Based on the principle of no arbitrage, the definite solution of PDE of a zero-coupon bond for geometric average Asian options under the circumstance of the mixed sub-fractional is given by the delta hedging technique. The derivation of the explicit pricing formula for geometric average Asian options with fixed strike price is achieved through the utilization of multiple variable substitutions. Furthermore, we perform numerical calculations to analyze the performance of the model. [ABSTRACT FROM AUTHOR]

The emergence of variable renewable energy (VRE) technologies has created a range of different energy contracting techniques. Within Australia's National Electricity Market (NEM), Run‐of‐Plant (RoP) Power Purchase Agreements (PPAs) became the most common form of contract with purchasers of wind and solar energy agreeing to pay a fixed price for energy irrespective of when it is produced and, therefore, its actual value to the market. In November 2023, the Commonwealth Government adopted a 32 GW RoP PPA Contract‐for‐Difference (CfD) underwriting policy that aims to effectively shield the generator from market price risk. This article discusses different contract structures and their impact on participant behaviour during periods of material oversupply and negative prices. We find that embedded solar PV exports into the distribution network, which are not required to dynamically participate in the wholesale market, have increased wholesale energy supply, enabling profit maximising vertically integrated renewable firms to drive prices lower in a manner that partially strands the output of RoP PPA CfD generators with a $0/MWh price floor. A key conclusion from our analysis is that requiring embedded solar PV to effectively participate in the wholesale market appears to be a pre‐condition for the efficacy of government‐initiated RoP PPA CfDs. [ABSTRACT FROM AUTHOR]

AbstractThis paper uses the mixed-methods approach to analyze farmer position in contract farming (CF) value chain, challenging simplistic “win-win” narratives that ignore power dynamics and “win-lose” ones that overlook economic factors. PepsiCo hires intermediaries as principal agents to control many smallholders, thereby reducing transaction costs and exerting control over quality raw materials. Through secure commissions to agents and fixed prices to farmers, PepsiCo transfers capital and production risks, respectively. The value chain analysis at each farming stage reveals that although CF addressed specific inputs and output constraints for smallholders, the unequal power dynamics and monopsony position of PepsiCo and intermediaries raise sustainability concerns. The existing unequal power relations within CF value chains underline the urgency of establishing a regulatory mechanism. Without such oversight, individual farmers may find it challenging to advocate for their interests in the face of corporations and intermediaries in cultivating high-value crops, for which demand is rising. [ABSTRACT FROM AUTHOR]

As, in most countries, electricity cannot be efficiently and practically stored at a systemic level, charging EVs during peak hours implies that additional energy has to be generated (relying almost exclusively on fossil sources) to cover the additional demand during that time window. This article reports the results of an SP-study, in which EV-owners were confronted with the option of charging their EVs at home (for a fixed known price) or at a publicly accessible charging station with charging price variability (as well as other features of EV charging). The results of the behavioral experiment show that EV-users exhibit a high willingness to accept alternative compensations for not charging EVs during peak-hours and that small monetary incentives as well as shorter access times, a guaranteed charging place, or fast charging could all efficiently promote a shift in the charging patterns toward a more sustainable behavior. [ABSTRACT FROM AUTHOR]

The net return from milk to the producers is defined as the aggregate market income from dairy products, after deducting all processing and marketing costs. The way to distribute this net return is through the payment system, which is usually based on multiple components, mainly with a reward for fat and protein and, in the case of the New Zealand dairy industry, a penalty for milk volume. Traditionally, the value of genetic improvement is evaluated using selection index theory assuming that there is an unlimited market where all dairy products can be sold in unlimited amounts at a fixed price and therefore economic values for fat and protein are assumed to be independent of demand. The objective of this study was to estimate the value of continuous genetic improvement evaluated using a model encompassing all the dairy producers in the industry where prices of the dairy products were determined by product specific supply-demand curves. Over 10 years of genetic improvement, the present value of the benefit (10% discount rate) was estimated to be $123,000 per farm. The corresponding benefit when the markets were assumed to have fixed commodity prices was $183,000 per farm. The model revealed that systematic genetic gains had a finite duration during which incremental benefits progressively declined and would be exhausted eventually. [ABSTRACT FROM AUTHOR]

The construction industry has witnessed unprecedented disruptions in the supply chain (SC) over the past four years due to the consecutive impacts of the 2018 steel and aluminum tariffs, the COVID-19 pandemic, and the Russian–Ukrainian war. SC disruptions have been linked to price escalations, the management of which varies across different construction contracts. Thus, there is a timely need to understand the contractual implications of price escalation clauses. This article fulfills this research requirement by following an interdependent research methodology. First, the authors analyzed and compared price escalation provisions under various US-based, international, and UK-based standard design–bid–build contracts. Second, the authors examined legal cases that have arisen due to disputes over price escalation-related matters. Third, based on the contractual and legal analysis, the authors formulated and proposed a set of contractual considerations that can be used to plan and manage the contractual implications arising from triggering price escalation clauses. The findings indicate substantial variability in contractual provisions addressing price escalation. A predominant approach entails specifying a fixed contract price, often with a general exception permitting adjustments related to legislative changes. Certain standard contracts afford flexibility through the incorporation of supplementary clauses or amendments during the contract formation stage to counteract escalation risks. Further, insights from the legal review show that judicial relief from contractual obligations is typically granted solely in instances of unforeseen and severe economic conditions. This research makes a significant academic contribution by advancing the understanding of contractual obligations concerning price escalation, especially in the context of ongoing market disruptions. Ultimately, the findings of this study will impact the construction industry by promoting more balanced contractual practices regarding price escalations in construction projects. [ABSTRACT FROM AUTHOR]

A Simple Monotonic Dynamic Pricing Policy We consider a canonical revenue management setting in which a monopolist seeks to maximize expected total revenues by selling a fixed inventory of product to customers who arrive sequentially over time. It is known in the literature that a simple dynamic pricing policy can perform reasonably well in such setting. However, the literature typically assumes that price can move freely over time (i.e., it can either go up or down). In practice, firms often impose certain restrictions on price movement. In this paper, we consider the setting in which price can only move monotonically over time (either only decreasing or only increasing). We devise a simple provably near-optimal dynamic pricing policy. Aside from markdown applications, our policy can also be applied to the setting with strategic customers. We consider a canonical revenue management problem wherein a monopolist seller seeks to maximize expected total revenues from selling a fixed inventory of a product to customers who arrive sequentially over time, and the seller is restricted to implement a pricing policy that is monotonic (either nonincreasing or nondecreasing) over time. Gallego and Van Ryzin [Gallego G, Van Ryzin G (1994) Optimal dynamic pricing of inventories with stochastic demand over finite horizons. Management Sci. 40(8):999–1020] show that the simplest monotonic price policy, the fixed price policy, is asymptotically optimal in the high-volume regime in which both the seller's initial inventory and the length of the selling horizon are proportionally scaled. Specifically, the revenue loss of the fixed price policy is O (k 1 / 2) , where k is the system's scaling parameter. Following the publication of Gallego and Van Ryzin [Gallego G, Van Ryzin G (1994) Optimal dynamic pricing of inventories with stochastic demand over finite horizons. Management Sci. 40(8):999–1020], several papers have attempted to improve the performance of the fixed price policy. Among them, Jasin [Jasin S (2014) Reoptimization and self-adjusting price control for network revenue management. Oper. Res. 62(5):1168–1178] develops a simple modification of the fixed price policy (that allows prices to move either up or down) with a guaranteed revenue loss of order O (ln k). In this paper, we propose a novel family of monotonic readjustment policy, which restricts the prices to only move in one direction (i.e., either up or down). We show that, if the seller updates the price for only a single time, then the revenue loss of our policy is O (k 1 / 3 (ln k) 2 α) for some α > 1 / 2. If, however, the seller updates the prices with a frequency O (ln k / ln ln k) , then the revenue loss of our policy is O ((ln k) 7 α) for some α > 1 / 2. These results show the power of dynamic pricing even in the presence of monotonic price restriction. We discuss two applications of our policy: markdown pricing and pricing in the presence of strategic customers. Supplemental Material: The online appendix is available at https://doi.org/10.1287/opre.2020.0774. [ABSTRACT FROM AUTHOR]

It has become a consensus in the international community to actively address global climate change issues and strive to achieve carbon reduction. For this purpose, carbon finance market plays a significant role in reducing carbon emissions by providing financial mechanisms to support and incentivize emission reduction projects. As a type of carbon finance derivative, carbon swap is an agreement between two parties whereby a floating price is exchange for a fixed price for carbon emission right over a specified period. How to price carbon swap before signing, i.e., determine the fixed price in the swap contract, and valuate carbon swap during the life of the swap contract are key issues. Noting the fact that the underlying asset of carbon swap is carbon price, the primary task is to model carbon price reasonably. Due to the inherent challenges and uncertainties associated with pricing carbon, frequency stability is often not guaranteed, resulting in the failure of probability based methods. Thus, this paper characterizes the carbon price using uncertain differential equation under the framework of uncertainty theory, and derives swap pricing and valuation formulas. Estimations for unknown parameters in the proposed model are given. Finally, with carbon spot price in European Energy Exchange, real data analyses are documented to illustrate our proposed methods in details. [ABSTRACT FROM AUTHOR]

In the past two decades, there has been a decline in the use of uniform-price auctions in favor of fixed prices in markets of peer-to-peer lending, equity crowdfunding, and initial public offerings. This article aims to analytically study why this trend might be occurring. The analysis reveals that, relative to a fixed price, a uniform-price auction leads to more herding and strategic delay of bid submission and, consequently, a smaller transaction completion probability and lower expected revenue. These predictions are consistent with the empirical regularities observed for the bidding behavior and funding outcomes on Prosper, one of the leading peer-to-peer online lending platforms, and those documented in the literature for markets of equity crowdfunding and initial public offerings. [ABSTRACT FROM AUTHOR]

Live e‐commerce is one of the important forms of digital transformation of supply chain, which has become increasingly popular in recent years as a powerful tool for internet advertising, interaction, and merchandising. We propose two pricing models to examine the strategies of information disclosure and pricing within the live‐streaming supply chain. One model revolves around the agency framework, wherein the manufacturer determines the price while the streamer decides the level of information disclosure. The other model pertains to a self‐implementing framework, wherein the manufacturer determines both the level of information disclosure and the price. To evaluate the robustness of our findings, we extend our models to encompass three significant scenarios: (i) the platform involvement model, where a live‐streaming support platform becomes part of the supply chain; (ii) the fixed price model, which externalizes the manufacturer's pricing decision; and (iii) the dual‐channel operations model. Our analysis reveals that the cost associated with information disclosure impacts the streamer's profits in a nonlinear manner within the agency model. Interestingly, expanding the revenue‐sharing parameter does not invariably favor the manufacturer. Moreover, we observe that none of the live‐streaming sales models exhibits a clear advantage over the others. Additionally, we demonstrate that the platform's involvement limits the manufacturer's ability to utilize the agency model for live‐streaming sales. In situations with fixed pricing, the manufacturer is advised to disclose more production information during live‐streaming sales. [ABSTRACT FROM AUTHOR]

Platform business models are upending the value proposition of the companies in traditional industries, such as healthcare, through competitively pricing value-added services and products. In this study, we consider a unique, but important, on-demand two-sided service platform: a monopolistic online healthcare platform, which not only provides medical services to patients by connecting them with doctors, but also sells medical products to patients. A crucial operational decision for the platform is to set up a pricing scheme to encourage enough doctors and patients to participate on the platform. We consider two common pricing schemes in this study: fixed and linear pricing, in an empirically-grounded optimisation model that considers medicine pricing decisions together with network externalities. Our results show that the fixed pricing scheme almost always dominates the linear pricing scheme by providing the platform with higher expected profit. Our results also reveal the strong interdependence between the optimal doctor service pricing decision and optimal medicine pricing decision. However, these decisions are often made independently by different functional units of a firm, which could cause suboptimal platform financial performance. These results indicate the importance of pricing products and services in an integrated manner for maximising the profit of a product/service platform. [ABSTRACT FROM AUTHOR]

This paper deploys the material and discursive politics of storage as a lens into agrarian change in rural India. Focusing on onions (Allium cepa), a price volatile crop and a kitchen staple, it maps out the contested meanings of and motivations for storage among growers, governments, and agri‐logistics companies. Specifically, this paper asks why storage is increasingly positioned as a key solution to the problem of price instability. This emphasis, I argue, represents a distinct regime of agrarian biopower that seeks to intervene into the physical properties of the bulb to extend its material life, and thereby, manage produce, prices, and populations. In doing so, however, fundamental issues of social inequality and guaranteed prices are bypassed. Moreover, innovations in storage technologies lay the grounds for the entry of corporate capital into agriculture. Ultimately, techno‐capital‐intensive biopolitical infrastructures of storage portend the restructuring of India's agrarian economy in favour of elite farmers and agri‐logistics firms by circumventing the issue of a fixed and fair price for producers and consumers. [ABSTRACT FROM AUTHOR]

Setting the right fares is a key lever for increasing operating profitability in the airline industry. It is crucial to design fares that are both appealing to passengers and contribute to an increase in airline revenue. Although airline revenue management techniques have evolved to capture customer-choice behavior, the pricing and allocation decisions continue to be taken independently. However, since they are linked, a single optimization model can address this shortcoming. This paper presents a joint optimization model (JOM) that considers product prices and their allocation quantities as decision variables. A sequential optimization technique that divides the model into two decision problems is adopted to cope with JOM's complexity. The problem is divided into a master problem and a sub-problem, wherein product price changes are made in the master problem and, with these fixed prices, optimization is performed in the sub-problem. The sub-problem is solved by simplifying the non-linear JOM into a linear programming problem. The direction of product price changes in the master problem is identified using price elasticity of demand. A heuristic based on this concept is proposed and tested. The Elasticity-integrated Pricing and Allocation Heuristic (EPAH) is observed to produce a consistent increase in existing revenues. [ABSTRACT FROM AUTHOR]

The government of Nepal adopted the 2017 Nepalese National Strategy for Palliative Care (NSPC), which proposed that Essential Palliative Care Medicines (EPCMs) listed by the International Association for Hospice and Palliative Care (IAHPC) should be available at each healthcare institution. In 2017 after the issuing of NSPC, the Lancet Commission developed an EPCM list. To evaluate the inclusion of EPCMs recommended by both IAHPC and Lancet in national medicinal programmes, their availability, and affordability in Nepal. A cross-sectional descriptive study of the availability of EPCMs in Nepal, and their inclusion in the national essential medicines list, government health insurance medicines list, government fixed rate medicines list, and free medicines list. Affordability was assessed using the World Health Organization Daily-Define-Dose and the Nepal Government-defined minimum daily wage. A total of 27 of 33 (82%) of the IAHPC-EPCMs and 41 of 60 (68%) of the recommended formulations were available in Nepal. All the Lancet Commission recommended EPCMs were available in Nepal. Morphine was available in all formulations used in palliative care. 22%, 18%, and 10% of IAHPC-EPCMs were available cost-free via district hospitals, primary healthcare centers, and health posts, respectively. The government had not included opioids on both free and fixed price lists. A total of 24 of 33 (73%) IAHPC-EPCMs were available on the Government Health Insurance Medicines List. A total of 19 of 41 (46%) available EPCMs were affordable. Many EPCM formulations included in NSPC of Nepal are not available, and most available EPCMs are unaffordable if purchased out-of-pocket. While the availability is better with the government health insurance scheme, many people are not registered for this. Further improvements should follow the development of a Nepalese palliative care formulary. [ABSTRACT FROM AUTHOR]

We obtain consumer willingness to pay for subscription product lacking price variation by leveraging the usage and subscription choice variation. We demonstrate how to obtain the distribution of consumer willingness to pay (WTP) for digital subscription products, where consumers pay a fixed price each period for potentially unlimited usage, for example, music streaming like Spotify. Typically, in such applications, usage data are observed and is critically valuable for the method here. We demonstrate how variation in usage and subscription choice together can identify the WTP distribution in the absence of price variation. Our framework accommodates and builds upon a range of utility specifications for usage, which is related to subscription decisions. We provide the conditions required on exogenous variation impacting usage, and prove how these lead to identification of the WTP distribution. We also investigate the conditions under which usage variation is not equivalent to price variation. We apply our method to an empirical application using the data from a music streaming service. Using the estimated WTP distribution, we obtain the revenue maximizing prices for different consumer segments. History: Tat Chan served as the senior editor for this article. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mksc.2021.0426. [ABSTRACT FROM AUTHOR]

Governance mechanisms along the agri-food supply chains are increasingly important in a scenario of ecological transition. Under the conceptual and analytical lens of the Transaction Cost Economics, we explored farmers' preferences towards a variety of clauses usually adopted in production contracts. To this purpose, a discrete choice experiment among 190 durum wheat producers in Italy was conducted. Results from a latent class model showed that producers were mainly interested in fixed prices formula and to join shared rules of production but revealed little or no interest for compelling sustainable cultivation techniques and the provision of technical assistance. However, these preferences are heterogeneous across farmers and vary depending on their level of education and previous use of contractual arrangements, with relevant implications for contract design and management. [ABSTRACT FROM AUTHOR]

Purpose: Public–Private Partnerships (PPPs) are crucial to the procurement of global infrastructure projects. Moreover, a price mode based on a cluster of core concessionary items is key to the delivery of value-for-money and successful project outcomes. However, existing research has yet to fully identify PPP concessionary items, nor yet described the range of practical price modes. This study provides taxonomy of core concessionary items impacting PPP projects, systematically classifies price modes, and assesses the applicability and risk impacts of those price modes on PPP projects. Design/methodology/approach: This study adopts a comparative case study method in analyzing core concessionary items and alternative price modes. China is taken as the context, as it is one of the world's largest PPP markets. In ensuring research validity and reliability, diverse data sources are utilized, with a graphic content analysis tool developed to capture the structure of price modes. Findings: Eight PPP price modes are identified. These are: (1) UP (Unit Price) mode, (2) ALS (Annual Lump Sum) mode, (3) IRR (Internal Rate of Return) mode, (4) RP (Return for Investing Capital (RIC) - Profit Rate of O&M (PROM)) mode, (5) RFP (RIC - Financing Interest Rate (FR) - PROM) mode, (6) RFPL (RIC - FR - PROM - Lower Limit of User Charge (LLoUC)) mode, (7) RFL (RIC - FR - Lump Sum/Fixed Unit Price O&M Contract (LSOM/FUP)) mode, and (8) RFLL (RIC - FR - LSOM/FUP - LLoUC) mode. Other main findings are as follows: (1) Five risk allocation configurations can be achieved via these price modes. Yet while different price modes enable the allocation of specific risks, these do not always align with contracting parties' original intentions. (2) IRR and RP modes may be less applicable in general because of their vulnerability in allocating critical risks and capacity for spurring opportunistic behavior. Originality/value: By depicting the paths by which concessionary items in price modes affect cash flow, a systematic analysis of price modes was conducted exposing structural characteristics, along with risk allocation choice implications. The study is unique in: (1) Providing a systematic classification of PPP price modes used in PPP projects, (2) Presenting a comprehensive identification and streamlining of concessionary items in PPP practice, and (3) Analyzing the risk effects of different price modes. Together, these outcomes offer a hitherto unavailable perspective on PPP project risk management. The value of the study lies in the following: (1) Existing studies employ diverse concessionary items, but their applicability varies. This study offers an overarching framework facilitating decision-making in selecting appropriate PPP price modes and in determining concessionary items. (2) This study adds to the understanding of PPP price modes in significant ways that will aid local governments and potential sponsors in crafting and administrating more workable contract designs. [ABSTRACT FROM AUTHOR]

We introduce a new matching design for financial transactions in an electronic market. In this mechanism, called ad hoc electronic auction design (AHEAD), market participants can trade between themselves at a fixed price and trigger an auction when they are no longer satisfied with this fixed price. In this context, we prove that a Nash equilibrium is obtained between market participants. Furthermore, we are able to assess quantitatively the relevance of ad hoc auctions and to compare them with periodic auctions and continuous limit order books. We show that from the investors' viewpoint, the microstructure of the asset is usually significantly improved when using AHEAD. [ABSTRACT FROM AUTHOR]

The Fundamental Theorem of Asset Pricing is extended to a market model over a finite probability space with many assets that can be exchanged into one another under combined fixed and proportional transaction costs. The absence of arbitrage in this setting is shown to be equivalent to the existence of a family of absolutely continuous single-step probability measures and a multi-dimensional martingale with respect to such a family. [ABSTRACT FROM AUTHOR]

In this paper, we study the pricing of contracts in fixed income markets under volatility uncertainty in the sense of Knightian uncertainty or model uncertainty. The starting point is an arbitrage-free bond market under volatility uncertainty. The uncertainty about the volatility is modeled by a G-Brownian motion, which drives the forward rate dynamics. The absence of arbitrage is ensured by a drift condition. Such a setting leads to a sublinear pricing measure for additional contracts, which yields either a single price or a range of prices and provides a connection to hedging prices. Similar to the forward measure approach, we define the forward sublinear expectation to simplify the pricing of cashflows. Under the forward sublinear expectation, we obtain a robust version of the expectations hypothesis, and we show how to price options on forward prices. In addition, we develop pricing methods for contracts consisting of a stream of cashflows, since the nonlinearity of the pricing measure implies that we cannot price a stream of cashflows by pricing each cashflow separately. With these tools, we derive robust pricing formulas for all major interest rate derivatives. The pricing formulas provide a link to the pricing formulas of traditional models without volatility uncertainty and show that volatility uncertainty naturally leads to unspanned stochastic volatility. [ABSTRACT FROM AUTHOR]

Safflower grown in the western U.S. is often produced for birdseed mixes. Increasing demand for birdseed products, combined with regional drought, has shrunk western safflower availability. To satisfy the growing demand, processors may look to contracting strategies to incentivize production. We compare expected risk and corresponding certainty equivalents both from the processor and producer viewpoints under various contracting mechanisms and risk aversion levels. Results suggest that contracts containing a combination of lump sum acreage payments and fixed price performance payments would incentivize producer adoption of safflower while maintaining processor profitability and limiting the risk exposure of both parties. [ABSTRACT FROM AUTHOR]

Most empirical studies show that three factors are sufficient to explain all the relevant uncertainties inherent in option prices. In this paper, we consider a three-factor CIR model exhibiting unspanned stochastic volatility (USV), which means that it is impossible to fully hedge volatility risk with portfolios of bonds or swaps. The incompleteness of bond markets is necessary for the existence of USV. Restrictions on the model parameters are needed for incompleteness. We provide necessary and sufficient conditions for a three-factor CIR model that generates incomplete bond markets. Bond prices are exponential affine functions of only the two term-structure factors, independent of the unspanned factor. With our three-factor CIR model exhibiting USV, we derive the dynamic form of bond futures prices. By introducing the exponential solution of a transform and using the Fourier inversion theorem, we obtain a closed-form solution for the European zero-coupon option prices. The pricing method is efficient for taking into account the existence of unspanned stochastic volatility. [ABSTRACT FROM AUTHOR]

We examine whether cigarettes serve as substitutes for electronic nicotine delivery systems (ENDS) among ENDS users and demonstrate methodological extensions of data from a cross‐price purchase task to inform policies and interventions. During a clinical laboratory study, n = 19 exclusive ENDS users and n = 17 dual cigarette/ENDS users completed a cross‐price purchase task with cigarettes available at a fixed price while prices of own‐brand ENDS increased. We estimated cross‐price elasticity using linear models to examine substitutability. We defined five additional outcomes: nonzero cross‐price intensity (purchasing cigarettes if ENDS were free), constant null demand (not purchasing cigarettes at any ENDS price), cross‐product crossover point (first price where participants purchased more cigarettes than ENDS), dual‐demand score (percentage of prices where both products were purchased), and dual‐use break point (minimum relative price to force complete substitution). The cross‐price elasticity results indicated that cigarettes could serve as substitutes for ENDS among ENDS users on average, but this average effect masked substantial heterogeneity in profiles of demand (here, a measure of the drug's reinforcement potential). Policies and regulations that increase ENDS prices appear unlikely to steer most exclusive ENDS users toward cigarette use, as most would not purchase cigarettes at any ENDS price, but they could prompt some dual users to substitute cigarettes completely while others remain dual users. This heterogeneity in consumer responses suggests additional indices of cross‐product demand are useful to characterize the anticipated and unanticipated effects of tobacco price policies more fully. [ABSTRACT FROM AUTHOR]

This paper investigates the effects of Resale Price Maintenance (RPM) agreements in Europe by studying a legally permitted form of RPM in the book market. In particular, we study the effects of such agreements on prices and sales, finding that countries which have Fixed Book Prices policies witness higher book sales, relative to countries without such a policy, with no noticeable effect on the average price of books. We suggest that the mechanism for these findings is that FBP policies promote non-price competition and a diverse network of retailers, increasing quantity, whereas a change in bargaining power reduces double marginalisation, offsetting upward pricing pressure from RPM. While these results are limited to the book sector and are based on a limited number of countries changing policy, they nonetheless highlight that RPM agreements have the ability to confer positive competition effects and absolute prohibition of such agreements may not always be warranted. [ABSTRACT FROM AUTHOR]

Our paper shows how Charles P. Kindleberger examined the function of the international lender of last resort and anticipated the rules governing the dollar swap line program (with unlimited amounts and at a fixed price) implemented by the Federal Reserve in the aftermath of the failure of Lehman Brothers in September 2008. We systematically explore Kindleberger's works on the central bank swap agreement in order to discern the theoretical foundations of the international lender of last resort rules he proposed. In this respect, two of his arguments that appear concomitantly must be distinguished. The first concerns the burden that the leadership partly or mostly should shoulder because of the problem of free riding—this is the traditional argument of benevolent leadership. The second argument concerns the efficiency with which the leadership operates as the stabilizer given the international monetary and financial context—this argument of the efficient stabilizer has been far less studied in the literature. We find that the Federal Reserve was not a benevolent monetary institution, but the global financial stabilizer instead—meaning that Kindleberger's second argument finally prevailed. We conclude by emphasizing how central bankers rediscovered Kindleberger's contribution to the international lender of last resort function. [ABSTRACT FROM AUTHOR]

The stocking and harvesting strategies used in aquaculture have a strong influence on the economic yields, and producers of aquatic species need alternatives that improve culture conditions and production economy. In this study, we used tilapia growth data from construct bioeconomic models to determine the best stocking and harvesting strategies under homogeneous (HM) and heterogeneous (HT) stocking sizes. We considered 180, 195, 210, and 225 days to harvest. Minimum marketable sizes (MMS) (minimum harvestable fish sizes) were defined according to the market as 350, 400, 450, and 500 g. The bioeconomic analysis considered a fixed price and a price that was variable depending on the size of the fish. With an average growth model and fixed price of USD$ 2.24 kg−1, independent of MMS, the economic results were negative under both HM and HT stocking and for all harvest times. With size-dependent variable pricing, the highest net benefit was generated by the 225-day, 500 g harvesting strategy, with USD$ 5061.91 per tank under HM and USD$ 5220.53 per tank under HT. Using quantile regressions and fixed pricing, the 225-day, 350 g strategy had the highest yield under HM and HT, with USD$ 4323.51 and USD$ 4190.90 per tank, while with variable pricing, the 225-day, 450 g strategy had higher yield in HM and HT, with USD$ 8634.03 per tank and USD$ 8983.26 per tank. Thus, growth modeling using quantile regression to approximate the population distribution suggested that HT stocking and size-dependent variable pricing generate higher yield for tilapia producers. [ABSTRACT FROM AUTHOR]

Cloud computing is a dynamic paradigm which aims to provide on-demand computing resources to a user over the Internet. Most of the existing cloud providers use fixed pricing strategy. However, a few cloud service providers have recently priced their services using auction-style pricing. While cloud consumers take care of Quality of Service (QoS), their preferences for QoS differ from those of cloud providers. Consumers that use the cloud, for example, typically expect high availability, therefore, they need to bring availability, reliability, and scalability together to achieve true high availability. In contrast, high availability entails more expenditures in hardware and/or software resources, resulting in higher expenses for cloud providers. In this paper, we propose a novel auction strategy to include QoS parameters bundle into the price, allocating available cloud services between users, and establishing an auction strategy to enable revenue approximation. In order to accomplish this, we formulate the problem of allocating a cloud service coupled with bundle of QoS parameters to the winners as a multi-attribute auction problem. To address this problem, we present a novel multi-attribute auction pricing model with numerous consumers and a single cloud provider. We also introduce the new QoS Parameter Bundle Pricing Scheme that establishes the relation between a cloud service's bundle of QoS parameters and the estimated price of cloud resources, which can produce more revenue than a fixed pricing strategy. Last, we put forward three algorithms MAAPM (i.e., to solve a multi-attribute auction problem), FMAA (i.e., represents existing state-of-the-art auction mechanisms in the literature) and Fixed-Payment (i.e., represents the currently used fixed payment strategy). Extensive simulations have revealed that MAAPM outperforms FMAA and Fixed Payment in all the metrics except the execution time, also MAAPM results at growing revenues for cloud providers and decreasing expenditure for users. [ABSTRACT FROM AUTHOR]

As is well known, the utility function is significant for solving the real-time pricing problem of smart grids. Based on a new utility function, the social welfare maximization model is considered in this paper. First, we transform the social welfare maximization model into a smooth system of equations using Krush-Kuhn-Tucker (KKT) conditions, then propose a two-step smoothing Levenberg-Marquardt method with global convergence, where an LM step and an approximate LM step are computed at every iteration. The local convergence of the algorithm is cubic under the local error bound condition, which is weaker than the nonsingularity. The simulation results show that, the algorithm can not only reduce the user's electricity consumption but also improve the total social welfare at the most time when compared with the fixed pricing method. Additionally, when different values of the approximating parameter are adopted in a smoothing quasi-Newton method, the price tends to that obtained by the present algorithm. Furthermore, the CPU time of the one-step smoothing Levenberg-Marquardt algorithm and the proposed algorithm are also listed. [ABSTRACT FROM AUTHOR]

This paper studies a model proposed by Baaquie (Phys A Stat Mech Appl 541:123367, 2020b) for which a corporate bond pays coupons that are stochastic—depending on the valuation of the issuer. It is shown that by considering bonds with stochastic coupons that are 'equivalent' to fixed coupon bonds (defined in the paper), the price of the fixed coupon bond can be accurately explained. The proposed model of stochastic coupons has a built-in hedge for the issuer—and has the feature of profit and loss sharing between investor and issuer making it a viable instrument for Islamic finance. [ABSTRACT FROM AUTHOR]

Fuzzy relational inequalities composed by the min-product operation are established to model the optimal pricing with fixed priority in a single product supply chain system. The solution algorithm has been proposed for solving such an optimization problem and finding the optimal solution (is called lexicographic maximum solution). In this study, a novel approach is proposed to finding the optimal pricing with fixed priority in a single product supply chain system. This approach is based on new properties of solution set in a min-product fuzzy relational inequality. These new properties allow us directly determine the optimal value of variable without many duplicate checks in the solution procedure. A numerical example is provided to illustrate the procedure. [ABSTRACT FROM AUTHOR]

Problem definition: Revenue management in railways distinguishes itself from that in traditional sectors, such as airline, hotel, and fashion retail, in several important ways. (i) Capacity is substantially more flexible in the sense that changes to the capacity of a train can often be made throughout the sales horizon. Consequently, the joint optimization of prices and capacity assumes genuine importance. (ii) Capacity can only be added in discrete "chunks" (i.e., coaches). (iii) Passengers with unreserved tickets can travel in any of the multiple trains available during the day. Further, passengers in unreserved coaches are allowed to travel by standing, thus giving rise to the need to manage congestion. Motivated by our work with a major railway company in Japan, we analyze the problem of jointly optimizing pricing and capacity; this problem is more-general version of the canonical multiproduct dynamic-pricing problem. Methodology/results: Our analysis yields four asymptotically optimal policies. From the viewpoint of the pricing decisions, our policies can be classified into two types—static and dynamic. With respect to the timing of the capacity decisions, our policies are again of two types—fixed capacity and flexible capacity. We establish the convergence rates of these policies; when demand and supply are scaled by a factor κ∈N , the optimality gaps of the static policies scale proportional to κ , and those of the dynamic policies scale proportional to logκ. We illustrate the attractive performance of our policies on a test suite of instances based on real-world operations of the high-speed "Shinkansen" trains in Japan and develop associated insights. Managerial implications: Our work provides railway administrators with simple and effective policies for pricing, capacity, and congestion management. Our policies cater to different contingencies that decision makers may face in practice: the need for static or dynamic prices and for fixed or flexible capacity. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.0246. [ABSTRACT FROM AUTHOR]

We use novel survey data to study firms' inventory contracts. We document facts about the usage of purchase and sale contracts. We find that firms purchase and sell inventory through three contractual arrangements: fixed price and quantity, fixed price only, and fixed quantity only. Those using fixed price and quantity hold the largest share of contracts. The average duration of purchase contracts is not very different from the average duration of sale contracts. We then find that the upward bias in inflation expectations is a feature of firms that do not purchase or sell largely through contracts. Our findings are useful in the calibration of sticky price models. [ABSTRACT FROM AUTHOR]

Due to the rising prices of houses and rent, apartment buildings have become the preferred and most utilized dwellings in Australia. However, there have been cases of serious defects in multi-unit dwellings (apartment buildings), posing various risks to and reducing potential residents' confidence in such dwellings. To address this issue, the current study investigated the types, causes, risk severity, and impacts of defects on residents in mid- to high-rise multi-unit dwellings in Australia. The study utilized a mixed approach involving quantitative (online questionnaire) and qualitative (interviews) methods. Data were collected from 104 apartment building residents in Brisbane, Queensland, Australia, with support from interviews with six experienced local construction professionals. The results revealed that there are 11 key defects present in local apartment buildings, with waterproofing, internal finishes, and structural issues being the most frequently reported. Residents typically report these defects to building owners, agents, and managers, who take more than three months, on average, to rectify them, adding to the residents' psychological issues and their inability to use the property as intended. The reasons for the delayed rectification of defects include non-responsive owners, agents, and building management teams, scheduling conflicts, litigation, and high costs. The interviewed professionals acknowledged the presence of defects and identified the reliance on Design and Construct (D&C) and fixed price contracts, lack of public awareness, and absence of a system to capture builders' reputation, as well as a manipulative quality check system, as key reasons for defects. This study addresses the defect concerns in multi-unit Australian dwellings (apartments) and expects to spark a much-needed debate around reforms in the construction sector to address these issues and minimize their risks and impact on residents. [ABSTRACT FROM AUTHOR]

In the context of actively and steadily implementing the "dual carbon" strategy, two competing electric vehicle manufacturers (manufacturers m1 and m2) were selected as research objects to construct two different leasing strategy models for electric vehicle manufacturers, namely, m1 provided a unit rental electric vehicle strategy and m2 provided a fixed rental electric vehicle strategy. We studied the optimal car rental strategy and pricing of the two manufacturers under the situation of m2 providing and not providing rental service efforts, and the influence of relevant factors on the optimal decision are explored. It shows that the price of electric vehicles rented by consumers per unit increases with the combined effect of the coefficient of rental service effort and the marginal cost of the rental service effort, while the price of fixed rental electric vehicles decreases with the combined effect of both. When the unit rental preference coefficient is large, the unit rental of electric vehicles will give m1 maximum profit. When the rental service effort coefficient is high, m2 is the most profitable. The efforts to provide leasing services of m2 increase their own interests to a certain extent. The greater the effort coefficient of leasing services, the smaller the marginal cost of leasing services, and the optimal social welfare reaches the maximum. The conclusion of the article can provide relevant leasing insights for electric vehicle manufacturers and also provide certain theoretical guidance for promoting electric vehicle leasing service strategies. [ABSTRACT FROM AUTHOR]

This paper's main objective is to assess the impacts of the ban on cages for housing laying hens, planned by the European Commission to raise animal welfare standards beyond the level set in the current legislation. The farm-level economic assessments of the ban were carried out in three stages: farm surveys and expert consultations, farm-level analyses, and aggregation to the EU-27 egg production sector. Four scenarios were constructed. All financial estimates were conducted with fixed prices from the year 2021 for which the reference scenario was built. Alternative hen-housing systems were barn (Voliera), free range, and organic. Until now, more than 50% of laying hens in the EU have already been transferred to alternative systems. The remaining part is subject to the transition. The basic assumptions included a reduction in yields due to the required lower densities and specifics of the production systems. A factor strongly differentiating the scenarios is likelihood of exists form the sector, as declared in the survey by many farmers, mainly those reaching retirement age without successors and keeping relatively small flocks of hens. The introduction of the ban will cause a decrease in egg production, varying between the scenarios. Substantial investments will be required within the range of 2–3.2 billion EUR, depending on the scenario. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to understand how the degree of congruence between buyers' and sellers' intentions to negotiate impacts buyers' postpurchase emotions and attitudes. In addition, the study examines whether buyers' self-confidence and negotiation expertise can increase buyers' perceptions of control and regret, as well as buyers' postpurchase satisfaction and enjoyment with the purchase. Traditionally, marketplace exchanges have been classified as either fixed price or negotiated. The present research treats marketplace exchanges along a continuum of intention congruence to test the relationships between intention congruence and outcome variables of control, regret, satisfaction and enjoyment with the purchase. Design/methodology/approach: The authors studied the perceived difference between buyers' and sellers' intentions to negotiate and how the difference impacts buyers' postpurchase attitudinal and emotional outcomes. A mail survey of automobile buyers resulted in a sample of 291 respondents. An automobile is a significant and irreversible purchase for a buyer. Thus, automobile markets often host transactions that evoke dissonance and regret for buyers if things go awry. In addition, buyers and sellers vary considerably in their desire to negotiate, thus reflecting a range of intention congruence in negotiation. Therefore, a survey of automobile buyers was considered appropriate for testing the effects of intention congruence on buyers' postpurchase outcomes. Findings: Results indicate that when buyers are willing to negotiate but sellers do not reciprocate equally, buyers feel less in control of a transaction. Contrarily, buyers experienced greater control and lesser regret when buyers' perceptions of sellers' intention to negotiate exceeded buyers' own intentions to negotiate. Results also suggest that when buyers' intentions to negotiate were congruent with buyers' perception of sellers' intention to negotiate, greater dyadic levels of negotiation marginally lowered buyers' perceived regret. Overall, an intention-congruence perspective adds to the current understanding of negotiated exchanges and is a meaningful approach for improving postpurchase outcomes for buyers. Research limitations/implications: The study used only the consumers' perspective of negotiation. Although this is supported by studies in power and dependence because the consumers' perspective is valuable and valid, a true dyadic measurement of the negotiation process can only be obtained if the sellers' view is also incorporated. This remains a key limitation of this study. Practical implications: The results suggest that sellers may be better off honoring buyers' intentions to negotiate. Intention incongruence negatively impacted buyer satisfaction when buyers perceived sellers to be less eager to negotiate. However, where sellers seem more eager to negotiate, incongruity favored buyers and positively impacted buyers' postpurchase outcomes. Thus, for sellers, it is worthwhile to consider adding policies that honor negotiation. Originality/value: Past research classifies marketplaces exchanges as either fixed price or negotiated. The present study uses intention congruence as a continuum between transaction partners. The intention congruence approach allows a closer examination of both the symmetry and strength of intentions to negotiate in a dyadic exchange. Given that markets are comprised of buyers and sellers who display considerable variability in intentions to negotiate, examining intention congruence allows for a more realistic study of negotiation behavior in business-to-consumer marketplaces. [ABSTRACT FROM AUTHOR]

This paper characterizes Vickrey auction with reserve price [VARP], in single and multiple objects settings, using normative and strategic axioms. In particular, it provides a new interpretation of reserve price as the infimum of a particular set of non-negative real numbers. In the single object case, we find that a strategyproof mechanism satisfies anonymity in welfare, agent sovereignty and non-bossiness in decision if and only if it has a VARP allocation rule. We extend this result to the multiple objects setting by introducing a continuity condition, and showing that any reasonable sale procedure (fixed prior to the realization of the number of available objects) involving continuous and strategyproof mechanisms that satisfy the aforementioned properties: must always use VARP with a fixed reserve price. [ABSTRACT FROM AUTHOR]

Introduction. The article deals with the problem of providing food to the Moscow province in 1917. An analysis of the activities of the Moscow Provincial Food Committee allows us to trace the features of the food business in Russia, to find ways out of the current situation with the supply of bread and essentials to the province. Food policy at all times is the basis of the national security of the country, as it includes economic, social, national factors that provide the basis for the stability of the state. The food crisis that began in 1916 became the catalyst for the revolutionary processes of 1917 in Russia. Turning to the activities of the tsarist government, the Provisional Government in the field of regulating the agrarian issue, providing food for the army and the civilian population, one can trace the policy mechanisms of the proposed reforms, their positive and negative sides.Materials and methods. There were no special studies devoted to the activities of the Moscow Provincial Food Committee directly, as a rule, the topics of food supplies for Moscow were touched upon, but the issue of supplying the population of the province was not investigated. For the analysis of materials, we used system-structural and system methods.Results. Based on archival materials, the article focuses on the rule-making activities of the committee in the field of regulating the work of local committees, instructors, and agents. Practical work is shown on organizing the provision of food to the population of the province, setting fixed prices, accounting for the harvest of 1917, etc.Conclusion. As a result, the Moscow Provincial Food Committee performed all the functions assigned to it by the provisional regulation, implemented the law on the grain monopoly, but the inconsistency of the decisions made by the Provisional Government, the inefficiency of the system of the procurement apparatus, did not allow the planned measures to be taken in solving the food issue.

In this paper, we study a family of sales-based rebate mechanisms as an effective tool to implement price discrimination across a population of buyers with correlated heterogeneous valuations on indivisible goods and services. In order to implement such sales-based rebate mechanisms, the seller charges each buyer a fixed price at the time of purchase contingent on a rebate that is a function of the ex post sales volume to be realized at the end of the sales period. The seller declares both a price and a menu of rebates as a function of sales. We show that, when there is a common component of uncertainty in consumers' valuations (to which we refer as the quality of the product), such rebates enable a seller to effectively induce different expected net prices at different valuations. Importantly, this effective price discrimination over valuations is achieved keeping both the base price and the rebate uniform across all buyers. This uniformity of price and rebate across buyers is a key advantage of our proposed rebate mechanism, thereby providing a new mechanism for price discrimination in crowd-based markets. We use tools and techniques from game theory and variational optimization to provide insight into the economics of such mechanisms. In particular, we identify two mechanisms that are monotone functions of the sales volume that are easy to implement in practice and perform well when compared with the much more complex optimal mechanism. We provide a rigorous analysis of the optimal mechanism and discuss practical limitations in implementing the globally optimal design, further demonstrating the efficacy of our proposed monotone mechanisms. This paper was accepted by Gabriel Weintraub, revenue management and market analytics. Funding: This research was supported by a Vannevar Bush Fellowship from the Office of Secretary of State and Army Research Office [MURI Project W911NF-19-1-0217]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.4691. [ABSTRACT FROM AUTHOR]

We consider a vertically differentiated market where an incumbent strategically wants to launch a fighter brand to thwart a new entrant. Without a credibly commitment this launch is ineffective because the incumbent always has an incentive to price the fighter brand ex-post out of the market. Endogenous price leadership with fixed or list price announcement, and dual channeling with an intermediary retailer to distribute the fighter brand are analyzed as commitment devices. The optimal mode then depends on customers' sensitivities to a deviation from the price announcement as well as on the attractiveness of the underlying market. [ABSTRACT FROM AUTHOR]

Price discount is an important research topic in the field of inventory management. The existing research on this topic mainly considers fixed price discount, but ignores the situation in which stochastic short-term price discount may be involved. In this paper, we study an inventory problem considering stochastic short-term price discount and partial backordering. To address this problem, we propose an optimal replenishment and stocking model to maximise the retailers' profit. After that, a cost–benefit analysis-based heuristic method for solving the developed model is presented by considering two scenarios depending on whether a replenishment point belongs to a discount period or not. Furthermore, an algorithm is provided to elicit an optimal ordering policy from multiple solutions derived from the given heuristic solution method. Finally, a real case is offered to demonstrate the application of the proposed model, followed by a sensitivity analysis. The results indicate that a retailer can identify the optimal replenishment policy with the aim of achieving maximal profit in situations where stochastic short-term price discount and partial backordering are considered for certain inventory problems at hand. In addition, sensitivity analysis illustrates a fact that different values of the introduced parameters may influence the optimal replenishment policy. [ABSTRACT FROM AUTHOR]