This article studies the problem of sales-force compensation by considering the impact of sales-force behavior on a firm’s production and inventory system. The sales force’s compensation package affects how the salespeople are going to exert their effort, which in turn determines the sales pattern for the firm’s product and ultimately drives the performance of the firm’s production and inventor...

We consider a manufacturer introducing a new product into a distribution channel and examine what wholesale price should be charged. The setting in many ways is simple. The channel is abbreviated with the manufacturer selling directly to the retailer. The contract is also simple, merely a flat wholesale price. Demand is stochastic but independent and identically distributed in each period. Comp...

This research seeks to assess the impact of electronic Word-of-Mouth (eWOM) on sales performance of digital goods. Digital microproducts – such as Amazon.com’s 49-cent short books, or Apple’s 99cent songs – are digital goods that can be sold anywhere, at any time, at a low acquisition cost and no delivery costs via Web-based electronic commerce. Set at a fixed and low price, it is expected that...

We develop a model in which a profit-maximizing monopolist with uncertain cost of production sells to loss-averse, yet rational, consumers. We first introduce (portable) techniques for analyzing the demand of such consumers, and then investigate the monopolist’s pricing strategy. In contrast to the standard monopoly model, we find that in relatively stable environments, the firm chooses a discr...

Firms engaged in consumer product sales often implement a strict make-to-stock approach, applying a single price to all customers. In such systems, customers can get the product at the given price upon availability on the shelf. However, consumers can often tolerate a delay between order placement and demand satisfaction under a price discount. Recognizing this phenomenon, a supplier may consid...

Although price promotions have increased in both commercial use and quantity of academic research over the last decade, most of the attention has been focused on their effects on brand choice and brand sales. By contrast, little is known about the conditions under which price promotions expand short-run and long-run category demand, even though the benefits of category expansion can be substant...

This paper studies the dynamic behavior of price elasticity and its effects on the overall profit. Although price elasticity has a significant effect on sales, its dynamics have not been examined so far in pricing models. In this paper, a simple pricing model is suggested in which, price elasticity is considered dynamic. The suggested pricing model is concerned with a monopolist that its object...

Many industries including music and e-book industries have been making or already made the transition from physical to digital goods in a couple of decades. Since the transformation fundamentally affects the cost structure, consumers’ purchasing behavior, and other critical factors in the industries, it is important to understand the changes that the transition has brought about. This paper emp...

In the presence of intertemporal substitution, static demand estimation yields biased estimates and fails to recover long run price responses. Our goal is to present a computationally simple way to estimate dynamic demand using aggregate data. Previous work on demand dynamics is computationally intensive and relies on (hard to obtain) household level data. We estimate the model using store leve...

In the presence of intertemporal substitution, static demand estimation yields biased estimates and fails to recover long run price responses. Our goal is to present a computationally simple way to estimate dynamic demand using aggregate data. Previous work on demand dynamics is computationally intensive and relies on (hard to obtain) household level data. We estimate the model using store leve...