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We consider two variants of a pricing problem under the nested logit model. In the first variant, the set of products offered to customers is fixed, and we want to [...]

I. INTRODUCTION Slowdowns in economic activity create periods of severe fiscal stress for subnational governments due to the existence of balanced budget rules, borrowing limitations, and limited revenue-raising options (Poterba, [...], Rainy day funds are one of the primary tools that state and local policymakers employ to dampen the effects of downturns. However, since state business cycles are not perfectly synchronized, theoretically there should be risk-sharing benefits to governments who pool their fiscal resources over the business cycle. In this paper, we explore the issues associated with local government risk-sharing and provide estimates of the potential benefits to state governments. Our results suggest that a national rainy day fund would provide considerable fiscal benefits to state governments at a lower price than self-insuring through their own rainy day funds. Keywords: rainy day funds, fiscal institutions, risk sharing JEL Codes: H2, H3, H7

We study a seller that starts with an initial inventory of goods, has a target horizon over which to sell the goods, and is subject to a set of financial milestone constraints on the revenues and sales that need to be achieved at different time points along the sales horizon. We characterize the revenue maximizing dynamic pricing policy for the seller and highlight the effect of revenue and sales milestones on its structure. The optimal policy can be written in feedback form, where the price at each point in time is selected so as to track the most stringent among all future milestones. Building on that observation, we propose a discrete-review policy that aims to dynamically track the appropriate milestone constraint and show that this simple and practical policy is near optimal in settings with large initial capacity and long sales horizons even in settings with no advance demand model information. One motivating application comes from the sales of new multiunit, residential real estate developments, where intermediate milestone constraints play an important role in their financing and construction. Key words: revenue management; dynamic pricing; market uncertainty; estimation; feedback; real estate; asymptotic analysis History: Received November 20, 2009; accepted December 16, 2011, by Gerard P. Cachon, stochastic models and simulation. Published online in Articles in Advance April 27, 2012., 1. Introduction A popular practice in many industries is to make pricing decisions so as to 'track' upcoming milestones or targets, essentially lowering prices when falling behind targets and raising [...]

ABSTRACT Though charter schools are a relatively new phenomenon in American education, they have been in existence long enough now to allow for evaluation of operational outcomes relative to traditional [...]

We consider the problem of pricing multiple differentiated products with the nested logit model and, as a special case, the multinomial logit model. We prove that concavity of the total [...]

We analyze a revenue management problem in which a seller endowed with an initial inventory operates a selling with binding reservations scheme. Upon arrival, each consumer, trying to maximize his own utility, must decide either to buy at the full price and get the item immediately or to place a nonwithdrawable reservation at a discount price and wait until the end of the sales season where the leftover units are allocated according to first-come-first-serve priority. We prove the existence of an equilibrium consumer's strategy in this game and develop a simple and accurate asymptotic approximation for it. Through an extensive numerical study, we find that our proposed mechanism delivers higher revenues than the markdown practice with a preannounced fixed discount. The benefit is more emphasized when the seller is more patient than the consumers and (1) the ratio between the number of units put up for sale and the expected demand is moderate and/or (2) the heterogeneity of the consumers' valuations is moderate to high. In our numerical experiments, the revenue gap can reach more than 12%, which is quite significant for retail businesses that typically operate with narrow margins. Key words: revenue management; retail operations; markdowns; strategic consumer behavior; Bayesian-Nash equilibrium; asymptotic analysis History: Received April 6, 2008; accepted July 29, 2010, by Martin Lariviere, operations and supply chain management. Published online in Articles in Advance October 25, 2010., 1. Introduction The use of markdowns for selling a limited supply of perishable assets is an extended practice in retailing. In the apparel industry, a recent study suggests that around [...]

We consider a seller who owns two capacity-constrained resources and markets two products (components) corresponding to these resources as well as a bundle comprising the two components. In an environment where all customers agree that one of the two components is of higher quality than the other and that the bundle is of the highest quality, we derive the seller's optimal bundling strategy. We demonstrate that the optimal solution depends on the absolute and relative availabilities of the two resources as well as upon the extent of subadditivity of the quality of the products. The possible strategies that can arise as equilibrium behavior include a pure components strategy, a partial- or full-spectrum mixed bundling strategy, and a pure bundling strategy, where the latter strategy is optimal when capacities are unconstrained. These conclusions are contrary to findings in the prior literature on bundling that demonstrated the unambiguous dominance of the full-spectrum mixed bundling strategy. Thus, our work expands the frontier of bundling to an environment with vertically differentiated components and limited resources. We also explore how the bundling strategies change as we introduce an element of horizontal differentiation wherein different types of customers value the available components differently. Key words: vertical differentiation; limited resources; bundle pricing; mixed bundling; revenue management History: Received October 18, 2009; accepted August 1, 2010, by Preyas Desai, marketing. Published online in Articles in Advance October 25, 2010., 1. Introduction Simon Property Group (SPG), (1) the largest shopping-mall owner in the United States, leases mall space to retailers. Its portfolio of properties includes premium malls such as the [...]

ABSTRACT The 2001 recession had a major effect on Georgia's fiscal condition. We explore how economic conditions affected state and local financing of K- 12 education in Georgia. We find [...]

INTRODUCTION Beginning with New Hampshire in 1964, 42 states and the District of Columbia have legalized state-sponsored lotteries. Lottery sales in the United States topped $48 billion in fiscal year [...], We estimate annual income elasticities of demand for lottery tickets using county-level panel data for three states and find that the income elasticity of demand (and, thus, the tax burden) for lottery tickets has changed over time. This is due to changes in a state's lottery game portfolio and the growth in consumer income more so than competition from alternative gambling opportunities. Trends in the income elasticity for instant and online lottery games appear to be different. Our results raise doubts about the long-term growth potential of lottery revenue and have policy implications for state governments and those concerned about regressivity.

A study for developing a stochastic model for a high-level abstraction of a revenue management system (RMS) that helps in understanding the potential of incorporating auctions in revenue management in the presence of forecast errors associated with key parameters.

The welfare effects of the European Commission's proposed commodity tax harmonization are examined. The theoretical analysis extended a previous study that considered tax revenues channelled into public goods instead of being returned to the consumer as a lump sum. Tax harmonization offers social benefits under the assumption of conditional revenue neutrality, and transfers between governments and consumers.

Tax rates are too high when an increase in tax rates leads to lower tax revenues. In such cases, it is left to economists to determine the level of taxation at which revenues can be maximized. One way to determine the impact of tax rates on tax revenues is by using a model of growth based on human capital accumulation. Such a model would show that the growth-reducing effects of taxation have a moderate but significant effect on lowering the revenue-maximizing rate of taxation.

Buchanan and Lee [1982] suggest that politicians choose tax rates on the positively sloped segment of the short-run rate-revenue curve but the negatively sloped segment of the long-run curve. This paper uses recent estimates of the slope of the cigarette demand curve by Becker, Grossman and Murphy [1994] to test the hypothesis. Becker, Grossman and Murphy's parameter estimates combined with state-by-state data on key variables yields strong evidence against the hypothesis and instead suggests that marginal revenues from cigarette excise taxes are positive in every state., I. INTRODUCTION Cigarettes are a heavily taxed commodity. In 1989 for example, federal excise taxes were sixteen cents per pack and state taxes averaged an additional twenty-two cents. Cigarette excise [...]

Two models for estimating efficiency loss related to location-specific disability factors were used to analyze the effects of reallocating revenue assistance in Australia. The substitution of equal-per-capita distribution for the fiscal equilization principal when determining general revenue assistance distributions can lead to decreases in economic activity in the Northern Territory and in Tasmania. The use of a dynamic model which includes more time periods is suggested.

This paper attempts to examine the impact of state taxation and expenditure activities on Canadian labor and non-labor. Using state expenditure and revenue data for the period 1955-1986, the Canadian transfer ratio is estimated and then it is compared and contrasted with the transfer ratio for the United States. This inter-country comparison also enables us to isolate the influence of a crisis-induced rise in unemployment on the net transfer from arguments that the social wage grew because of the growing power of labor over capital and the state.

Correcting the relative lack of attention to the revenue side of public finance, this article examines to what extent globalization constrains partisan tax policy. The author hypothesizes that political ideology is still a good predictor of taxation in the neoliberal era, advancing this argument against the prominent globalization thesis: that global economic pressures have supplanted political ideology as the driving force of revenue policy. Although research in developed democracies identifies a resilient link between partisanship and policy outcomes, the impact of the drastic neoliberal transition on partisan policy making in the developing world remains poorly understood. Using time-series cross-section data to evaluate partisan taxation in South America, the author finds that partisanship is a reliable indicator of tax revenue in the neoliberal era. Counterintuitively, however, the promarket Right generates more tax revenue than the interventionist Left. The author argues that this previously unexpected revenue gap is driven by ideological concerns for equity versus growth.

We identify twenty-nine criteria that are proposed for decision makers to use when they consider revenue measures and classify these criteria into four categories: adequacy, neutrality, consent and fairness. This discussion offers the decision maker help in deciding how to select revenue measures.

This paper represents the first systematic attempt to link revenue structure to deficits cross-nationally. Recent analyses of the causes of increased budget deficits in the industrialized countries have focused on the factors that influence government spending, ignoring the possibility that chronic deficits might also be caused by shortfalls in revenue. In this research, using data from sixteen OECD countries during the period 1959-1990, we test hypotheses regarding the linkage between a country's revenue structure and its experience with deficits. We find evidence that countries heavily dependent on direct taxes had more difficulty keeping spending and revenues in line, particularly during times of high unemployment. We find no evidence, however, of a 'fiscal illusion' impact on deficits.

The full range of the meaning of revenue emerges from seriously considering how people understand revenues from various perspectives. Explicit discussion of revenue meanings may contribute to improving our understanding of revenue-related phenomena. Insights can be gained from considering revenues from various perspectives. Revenue conceptualizations examined here range from the most immediate one, the notion of resources, to policy devices, mediation of relationships, measurements of political situations, and values. These discussions show that a variety of meanings are associate with revenues and that revenues are at least as fundamental to public budgeting as expenditures.

Recent trends in state tax revenue reveal that overall reliance of states on taxes have been declining for the last 43 years. Faced with reduction in tax revenues, states have restructured their tax systems to meet public demand for more services. State income taxes are the one type of tax that has risen consistently. What causes state policy makers to rely on this type of tax? This research addresses this question.