Integrating dynamic pricing and inventory control for fresh‐agri product under consumer choice

In this article, we investigate a joint pricing and inventory problem for a retailer selling fresh‐agri products (FAPs) with two‐period shelf lifetime in a dynamic stochastic setting, where new and old FAPs are on sale simultaneously. At the beginning of each period, the retailer makes ordering decision for new FAP and sets regular and discount prices for new and old inventories, respectively. After demand realisation, the expired leftover is disposed and unexpired inventory is carried to the next period, for continuing selling. Unmet demand of all FAPs is backordered. The objective is to maximise the total expected discount profit over the whole planning horizon. We present a price dependent, stochastic dynamic programming model taking into account zero lead‐time, linear ordering costs, inventory holding and backlogging costs, as well as disposal cost. As the influence of the perishability, each customer selects his preferred choice based on the utility of product price and quality. By the way of constructing demand rate vector, the original formulation can be transferred to be jointly concave and tractable. Finally, we characterise the optimal policy and develop effective methods to solve the problem. We also conduct numerical studies to further characterise the optimal policy, and to evaluate the loss of efficiency under static policies when compared to the optimal dynamic policy.     

Optimal dynamics of environmental quality in economies in transition1

Environmental pressures in the transition economies of the post‐Soviet era affect not only the quality of life for local populations, but also other key economic issues such as privatization and employment by posing obstacles to their progress. Most studies addressing the environment in transition economies are empirical or analyze the effect of environmental protection on economic variables without first establishing an underlying framework together with the optimal path of environmental quality during the transition. This paper presents such a framework and a policy rule for attainment of the optimal balance between capital and environmental quality in economies in transition. Furthermore, the model shows that pollution taxes or tradable pollution permits are by themselves insufficient to implement the social optimum in a decentralized economy. The results of the model are consistent with depressed economic activity in those economies during an initial phase, and with the diversity of environmental policies in both Central and Eastern Europe (CEE) countries and the Newly Independent States (NIS). JEL classification: Q20, P20, O13.     

Export quality and income distribution in a small dependent economy

This paper provides a simple general equilibrium structure to analyze the two-way causation between choice of export quality by a small open economy and domestic income distribution. The important policy conclusion of our analysis is the following: When direct quality regulations are costly to impose or may not have desirable consequences for income distribution, the target level of export quality may be met through appropriate direct and indirect income redistribution policies such as wage policies or standard trade policies.     

Candidate strategies in primaries and general elections with candidates of heterogeneous quality

I consider a model in which candidates of differing quality must win a primary election to compete in the general election. I show that there is an equilibrium in which Democrats choose liberal policies and Republicans choose conservative policies, but higher quality candidates choose more moderate policies than lower quality candidates. In this equilibrium, higher quality candidates choose more moderate policies if they have a larger quality advantage or there is less uncertainty about the median voterʼs ideal point in the general election, and the candidates in a given primary choose closer policies to one another when there is a smaller quality difference between the candidates in a primary. I further show that if the candidates have policy motivations, then a low quality candidate may strategically choose to enter a primary even if running for office is costly and the candidate will lose the primary election with certainty in equilibrium.     

我国政府统计数据质量现状分析

政府统计数据的质量与国家宏观决策和企业微观决策的质量紧密相关,不正确和不完善的数据可能会导致决策的错误和失败。所以,现代社会对数据质量的关注更多。鉴于此,从我国政府统计数据质量的新进展和存在的问题两个方面,分析评价了中国政府统计数据质量现状。     

Bio-economic modeling of water quality improvements using a dynamic applied general equilibrium approach

An integrated bio-economic model is developed to assess the impacts of pollution reduction policies on water quality and the economy. Emission levels of economic activities to water are determined based on existing environmental accounts. These emission levels are built into a dynamic economic model for the Dutch economy and subsequently coupled to a national water quality model. The modular approach has the advantage that the impacts on the economy and water quality are evaluated simultaneously, but each within their own domain based on the appropriate scale and level of detail. The dynamic nature of the economic model allows us to also evaluate a derogated water policy as foreseen in the European Water Framework Directive. The indirect costs of different water quality improvement policy scenarios are at least as high as the direct costs related to investments in pollution abatement technology. The stricter the policy scenario, the more important the role of economic adjustment and restructuring mechanisms at the macro-economic level. Significant water quality improvements can be achieved through stringent domestic emission reductions. However, reaching water quality standards is highly dependent on water quality improvement policy in surrounding river basin countries and climate change.     

Time consistency and optimal government policies in perfect foresight equilibrium

This paper develops a framework for determining optimal monetary and fiscal policies in perfect foresight equilibrium. Such equilibria have the property that all underlying demand and supply functions are derived from optimizing behavior, expectations are realized, and all markets clear. The time consistency of optimal policies derived under such circumstances is analyzed for a variety of alternative optimal policy problems. The general conclusion is that time consistency will prevail with respect to the optimization of any single policy instrument which does not appear explicitly in the indirect utility functions; otherwise time inconsistency will result. Monetary instruments are generally examples of the former, and fiscal instruments examples of the latter.     

How should environmental policy respond to business cycles? Optimal policy under persistent productivity shocks

How should environmental policy respond to economic fluctuations caused by persistent productivity shocks? This paper answers that question using a dynamic stochastic general equilibrium real business cycle model that includes a pollution externality. I first estimate the relationship between the cyclical components of carbon dioxide emissions and US GDP and find it to be inelastic. Using this result to calibrate the model, I find that optimal policy allows carbon emissions to be procyclical: increasing during expansions and decreasing during recessions. However, optimal policy dampens the procyclicality of emissions compared to the unregulated case. A price effect from costlier abatement during booms outweighs an income effect of greater demand for clean air. I also model a decentralized economy, where government chooses an emissions tax or quantity restriction and firms and consumers respond. The optimal emissions tax rate and the optimal emissions quota are both procyclical: during recessions, the tax rate and the emissions quota both decrease.     

Engel’s curve and product differentiation: A dynamic analysis of the effects of quality on consumer’s choice

The application of Engel’s Curve in a single-product perspective may dramatically change the role of quality in affecting the dynamics of economic performance. This paper introduces a specification of preferences that regards quality as luxury, and quantity as necessary. The analysis is carried out by using a framework similar to Grossman’s and Helpman ’s (1991), while quality is defined as in Stokey (1988). The resulting consumer’s demand crucially depends on quality. Quality is potentially able to prevent the process, implied by neoclassical models, that leads the value of consumption goods to decline over time. By doing so, quality also affects the consumption bundle shares and the variety-specific consumption growth rates, thus influencing all dynamic quantitative variables of the economy. I thank Professor Beniamino Moro for his guidance and encouragement. I thank Stephen Wright for his comments and suggestions. I have benefited from the support of Alessio Moro, Dario Unali, Debora Fletcher, Emilio Merella, Esteban Jaimovich, Francesca Lamanna, Matteo Bellinzas, Mauro Merella and all my friends. I am also indebted to Professor Cuong Le Van and Professor Stephen Parente for their advice. I thank two anonymous Referees for their useful remarks.     

Vertical product differentiation and entry deterrence

I study how a potential entrant influences quality in a model of vertical product differentiation with quality-dependent production costs. With identical costs, the incumbent will always deter entry if possible, i.e., if fixed costs are high. Quality will be set at a level lower than or equal to the optimal quality under either duopoly or monopoly. Results are completely different when the entrant has substantially lower costs. They are explained by the relative location of the entrant's quality best response to the incumbent's optimal quality choice in monopoly. This sheds new light on the influence of industrial policy on market conduct.     

Capacity expansion and dynamic monopoly pricing

We substitute to the plant size problem, as investigated by Chenery [Chenery, H., 1952. Overcapacity and the acceleration principle. Econometrica], a new version in which a profit-maximizing monopolist may combine its investment policy with a price policy adjusting demand upwards or downwards over time. We characterize the optimal price and investment policies. The optimal price policy determines an investment pattern either with constant increments of capacity over time, or becoming constant after a finite time. The existing capacity is either fully used at each instant between two investment dates; or the monopolist first quotes the instantaneous monopoly price and, thereafter, the price dampening instantaneous demand at the optimal installed capacity level.     

Product R&D Investment Policies in an International Duopoly

This study analyzes the optimal product R&D investment policies of a developed and a developing country in an international Cournot duopoly where firms from these two countries compete through endogenous quality–quantity decisions. We explore a new international trade model by using demand functions derived from utility functions. We find that the optimal product R&D investment policies for both countries are subsidies. This study counters a finding that used Hotelling‐type demand functions and it partially modifies another result that adopted the same demand functions but with an international Bertrand duopoly.     

Dynamic control of a monopolist’s product and process innovation with reference quality

ABSTRACT

Our main purpose is to investigate the dynamic control problem of a monopolist’s product and process innovation under reference quality. The main features of this article are: (i) a monopolist dealing with customer behaviour in the spirit of the principle of behaviour economics determines the product price, and carries out the activities of product and process innovation; (ii) the consumers’ demand depends on price, product quality and reference quality, and adopts an additive separable demand function form. Our main results show that under the cases of the monopolist optimum and the social planner optimum, (i) there exists an unique stable, which is a saddle-point steady-state equilibrium; (ii) the change rates of the monopolist’s investments in product and process innovation are increasing with the reference quality, while the monopolist’s steady-state investments in product and process innovation are decreasing with the reference quality; (iii) as the memory parameter increases with other parameters kept constant, it is very likely that the monopolist’s investment in process innovation be greater than the investment in product innovation; and (iv) the social incentive towards both investments in product and process innovation is always larger than the private incentive characterizing the profit-seeking monopolist.     

The Stability of the Demand for Money in Monetary Unions: Some Empirical Evidence from WAEMU

Previous studies of the stability of the demand for money have been largely conducted in the context of individual countries. To the extent that these countries have control over their monetary policies, such an approach is well justified. However, for monetary unions, where the control over monetary policy is usually vested in a central or outside authority, it is more appropriate to examine the stability of the money demand for the union as a collective entity. This paper follows this approach with respect to a West African monetary union, the WAEMU, whose monetary policies are largely dictated by the French authorities. Using cointegration theory and CUSUM stability tests, we find evidence that the demand for broad money is stable in this union. Given the empirical results, the paper draws inferences regarding their implications for the formulation of optimal monetary policy for the WAEMU.     

Mitigating Negative Water Quality and Quality Externalities by Joint Management of Adjacent Aquifiers

Groundwater basins are usually separated into aquifers that are hydrologically interrelated. This interrelation may take the form of water movement from one aquifer to another. When differentials in water quality exist, pumping from one of the aquifers can cause water movement that may be associated with degradation of its quality. A management policy that considers this interrelation may be preferable to an independent management of each aquifer. This paper develops a dynamic optimal control model to evaluate joint versus independent management. The optimal joint pumping management, in which two adjacent aquifers of different water qualities are interrelated, is analyzed and compared to independent aquifer pumping, and the situations where joint management is not required are identified. Policy implications are then derived and discussed. Finally, the theoretical model is applied to a case of interrelated aquifers in southern Israel. The empirical model identifies conditions (interest rate, agricultural fresh water supply rainfall recharge, price of surface water, drinking water quality standards) under which a joint policy is preferable. The empirical results confirm the theoretical ones.     

Precautionary Principle and the Optimal Timing of Environmental Policy Under Ambiguity

I consider a problem in environmental policy design in which I focus on stock pollutants. In particular, I consider stock pollutants that cause severe damage on the environment and do not depreciate at all once they are released into the atmosphere and the ocean. The purposes of this paper are: (1) to provide an economic foundation for environmental policies based on the precautionary principle and the 1992 Rio Declaration on Environment and Development, and (2) to show that this optimal timing rule has a reservation property. Furthermore, I analyze the effect of an increase in ambiguity on the optimal timing of adopting some environmental policy, and show that an increase in ambiguity decreases the optimal timing of adopting the environmental policy.     

The Role of Information Provision as a Policy Instrument to Supplement Environmental Taxes

This paper examines, within a dynamic framework, the role of information provision as a policy instrument to supplement environmental taxation. Several products are responsible for health as well as environmental damages. Many consumers do not possess the required information to optimally substitute away from these products. However, as the stock of information regarding the negative effects of these products builds up, an increasing fraction of consumers behaves optimally. The government uses two policy instruments, environmental taxation and information provision. We show that as the accumulated stock of information increases, the optimal tax rate declines over time. Information provision can shift market demand towards environmentally friendly goods over time, and thus reduce the required level of the tax rate. Our results provide strong evidence in support of information campaigns as a policy instrument to supplement traditional environmental policies.     

Balanced-Budget Rules: Welfare Loss and Optimal Policies

Most economic models do not suggest an optimal fiscal policy in which the government's budget is balanced each period. Conventional wisdom suggests that the government run surpluses and deficits to smooth taxes. In this paper, I use an approach which brings together real business cycle theory and the theory of public finance to evaluate the effects of a balanced-budget restriction. Four fiscal policies are investigated in a model with growth. All models are solved numerically using a multidimensional collocation parameterized expectations algorithm. The welfare consequences of each policy are measured, and the optimal Ramsey policies are characterized. Journal of Economic Literature Classification Number: E62.     

区域经济圈创业政策比较分析及启示

基于内容分析法对珠三角经济圈、长三角经济圈和山东半岛蓝色经济区的创业扶持政策体系进行比较研究。结果表明：三大经济圈创业扶持政策体系的重点扶持产业和重点政策工具区域化特征显著,但均出现了重供给和环境类扶持政策、轻需求类扶持政策的结构失衡问题,其中山东半岛蓝色经济区政策结构失衡问题尤为突出,且其在整个政策扶持链中存在较多薄弱环节。根据三大经济圈创业扶持政策体系比较分析结果,结合山东半岛蓝色经济区优势和特点,提出了政策优化和改进建议。研究结论可为中国区域出台创业扶持政策提供借鉴。     

Dynamic monopoly production,inventory, and price policy under sophisticated demand

In this paper a dynamic demand surface arises out of a consumer intertemporal utility maximization problem. The monopolistic firm uses this dynamic demand surface to formulate its optimal price, production, and inventory policy.