T he macroeconomics literature has recently witnessed a resurgence of interest in issues related to nominal price rigidities. In particular, advances in computational methods have allowed for the analysis of fully articulated quantitative general equilibrium models with inflexible prices.1 Because nominal price rigidities create predictable variations in sales, these models provide a natural se...

We analyze the structure and pricing of option contracts for an industrial good in the presence of spot trading. We combine the analysis of spot trading and buyers’ disparate private valuations for different suppliers’ products, and jointly endogenize the determination of three major dimensions in contract design: (i) sales contracts versus options contracts; (ii) flat-price versus volume-depen...

Traditional demand models assume consumers are perfectly informed about product characteristics, including price. However, sales are a common supermarket practice. Using French data we show that retailers frequently change position in the price rankings, making it unlikely that consumers know all deals offered at each period. Further empirical evidence relating transaction prices, consumers’opp...

OBJECTIVE Small food store interventions show promise to increase healthy food access in under-resourced areas. However, none have tested the impact of price discounts on healthy food supply and demand. We tested the impact of store-directed price discounts and communications strategies, separately and combined, on the stocking, sales and prices of healthier foods and on storeowner psychosocial...

we developed an inventory model for decaying items with selling price dependent demand in inflationary environment. deterioration rate is taken as two parameter weibull distribution. shortages in inventory are allowed with partial backlogging. backlogging rate is taken as exponential decreasing function of time. profit maximization technique is used in this study.

We consider a manufacturer selling to a retailer with private demand information arising dynamically over an infinite time horizon. Under a backlogging model, we show that the manufacturer’s optimal dynamic long-term contract takes a simple form: in the first period, based on her private demand forecast, the retailer selects a wholesale price and pays an associated upfront fee, and, from then o...

The Internet today offers primarily a best-effort service. Research and development efforts are currently underway to allow the provision of better than best-effort quality of service assurances. In this article we develop a spot-pricing framework for bandwidth assured Internet service contracts. A nonlinear pricing model forms the basis for the framework. The price process is obtained for diff...

This paper analyses dynamic pricing in markets with network externalities. Network externalities imply demand inertia, because the size of a network increases the usefulness of the product for consumers. Since past sales increase current demand, …rms have an incentive to set low introductory prices to be able to increase prices as their networks grow. However, in reality we observe decreasing p...

This paper characterizes the set of Nash equilibria in a model of price-setting duopoly in which each firm has limited capacity, and demand is continuous and decreasing. In general there is a unique equilibrium, so that comparative static exercises are meaningful. The properties of the equilibrium conform with a number of stylized facts. The equilibrium prices are lower, the smaller is demand r...