An increasing number of retail energy markets exhibit price fluctuations and provide home users the opportunity to buy energy at lower than average prices. However, such cost savings are hard to realize in practice because they require human users to observe the price fluctuations and shift their electricity demand to low price periods. We propose to temporarily store energy of low price period...

Recent works question the benefit of Promotional Pricing (Hi-Lo) formats. In this essay, we characterize a setting in which cost-disadvantaged firms would rationally and profitably opt for the Hi-Lo format. Essentially, cost-disadvantaged retail firms, such as mall outlets and smaller chains lacking the economies of scale of their rivals, charge higher prices than their cost-competitive rivals....

We study the stylized problem of a multi-product firm that can revise prices only after paying a fixed “menu” cost. The key assumption, introduced by Lach and Tsiddon (1996, 2007) and Midrigan (2007, 2009), is that once the menu cost is paid the firm can adjust the price of all its products. The firm’s problem is to minimize the deviations of the profits incurred relative to the flexible price ...

We study the design of price mechanisms for communication network problems in which a user’s utility depends on the amount of flow she sends through the network, and the congestion on each link depends on the total traffic flows over it. The price mechanisms are characterized by a set of axioms that have been adopted in the cost-sharing games, and we search for the price mechanisms that provide...

We analyse the properties of optimal price adjustment to hospitals when no lump-sum transfers are allowed and when prices differ to reflect observable exogenous differences in costs. We find that: (a) when the marginal benefit from treatment is decreasing and the cost function is the power function, price adjustment for hospitals with higher costs is positive but partial; if the marginal benefi...

a r t i c l e i n f o JEL classification: C61 D92 Keywords: Price induced technical progress Disembodied technical progress Comparative dynamics Optimal control Testable implications A theory of a wealth maximizing, capital accumulating, price taking firm facing adjustment costs and operating in the presence of disembodied and price-induced technical progress is developed. The testable implicat...