The effects of major U.S. domestic airline code sharing and profit sharing rule

This paper presents a structural model of code sharing among major U.S. domestic airlines and estimates a profit‐sharing rule. The profit‐sharing rule between partner firms in code sharing is estimated at 0.92, which suggests that the operating carrier acquires around 92% of profits from a round‐trip, and the marketing carrier retains 8% as a commission fee. Meanwhile, the economies of code sharing reduces marginal cost, and firms are able to price at higher markups. This implies that demand increases and consumers have larger surplus if code sharing creates new products.     

Intermediated surge pricing

Although Uber and Lyft are known for their flexible “surge pricing,” they are surprisingly rigid in another way: each firm takes a constant percentage of passenger fare whether or not there is a surge. In this paper, I investigate the possible reasons for, and the impact of, this rigidity. I study a market in which a profit‐maximizing intermediary facilitates trade between buyers and sellers. The intermediary sets prices for buyers and sellers, and keeps the difference as her fee. Optimal prices increase when demand increases, that is, shifts right. If a demand increase is due to an increase in the number of ex ante symmetric buyers, then the intermediary's optimal percent fee decreases. If, instead, a demand increase is due to a reduction in the elasticity of demand, then the intermediary's optimal percent fee increases. In either case, if the intermediary keeps a constant percent fee regardless of shifts in demand, as is the case with Uber and Lyft, then surge pricing (i.e., the ratio of price during high demand to price during low demand) is amplified on one side of the market and diminished on the other side.     

Garbage and Recycling with Endogenous Local Policy

This paper estimates the impact of garbage fees and curbside recycling programs on garbage and recycling amounts. Without correction for endogenous policy, a price per bag of garbage has a negative effect on garbage and a positive cross-price effect on recycling. Correction for endogenous local policy increases the effect of the user fee on garbage and the effect of curbside recycling collection on recycling. Introducing a fee of $1 per bag is estimated to reduce garbage by 412 pounds per person per year (44%), but to increase recycling by only 30 pounds per person per year.     

One‐Stop Shopping as a Cause of Slotting Fees: A Rent‐Shifting Mechanism

Consumers increasingly prefer to bundle their purchases into a single shopping trip, inducing complementaries between initially independent or substitutable goods. Taking this one‐stop shopping behavior into account, we show that slotting fees may emerge as a result of a rent‐shifting mechanism in a three‐party negotiation framework, where a monopolistic retailer negotiates sequentially with two suppliers about two‐part tariff contracts. If the goods are initially independent or sufficiently differentiated, the wholesale price negotiated with the first supplier is upward distorted. This allows the retailer and the first supplier to extract rent from the second supplier. To compensate the retailer for the higher wholesale price, the first supplier pays a slotting fee as long as its bargaining power vis‐à‐vis the retailer is not too large.     

Optimal Two‐Part Pricing under Demand Uncertainty

This paper examines the pricing behavior of a risk‐averse monopolistic firm under demand uncertainty. The firm produces a single good at a constant marginal cost. To facilitate sales, the firm uses a two‐part pricing contract that includes a membership fee and a selling price per unit. The good is sold to a continuum of heterogeneous consumers who are subject to a common demand shock. We show that the global and marginal effects of risk aversion are to push the unit price closer to the constant marginal cost and to shrink the market coverage so as to limit the firm’s risk exposure to the demand uncertainty. The more risk‐averse firm as such charges a higher membership fee to consumers. We further show that an increase in the fixed cost of production induces the firm to lower (raise) the unit price, to raise (lower) the membership fee, and to shrink (enlarge) the market coverage under decreasing (increasing) absolute risk aversion. The firm’s optimal two‐part pricing contract, however, is unaffected by changes in the fixed cost under constant absolute risk aversion. Finally, we show that a mean‐preserving‐spread increase in the demand uncertainty induces the firm to lower the unit price, to raise the membership fee, and to shrink the market coverage under either decreasing or constant absolute risk aversion. The firm’s risk preferences as such play a pivotal role in determining the optimal two‐part pricing under demand uncertainty. Copyright © 2013 John Wiley & Sons, Ltd.     

The Profit‐Maximizing Case for Corporate Social Responsibility in a Bilateral Monopoly

We analyze a stylized distribution channel (bilateral monopoly) model where an upstream manufacturer sells output to a downstream retailer. In a two‐stage linear demand game setting, we show that a two‐part contract, consisting of a wholesale price and corporate social responsibility (CSR) component, can be utilized by the manufacturer to fully coordinate and control its retailer. Thus, a CSR contract can be used in place of the traditional two‐part tariff scheme (wholesale price and fixed franchise fee) to optimally coordinate the marketing channel. Our model provides a novel theoretical profit‐maximizing rationale for the strategic use of CSR. Copyright © 2013 John Wiley & Sons, Ltd.     

河北省冶金矿山行业税费负担研究及建议

近年来铁矿市场价格持续走低,各类税费成本已占生产经营成本的1/3左右,冶金矿山企业特别是中小铁矿企业挣扎在生死线上。以河北省为例,基于冶金矿山税费构成现状分析,提出以合理、公平、区别对待原则调整和完善税费政策的建议。     

Do I have to go shopping again? A theory of choice with movement costs

In this model, the standard theory of the one-person household is extended into space and time. The theory is extended into space by imposition of a real trip cost on the act of purchase, separate from the money price of commodities. It is extended into time by imposition of a real cost of storage (represented by “deterioration”) on the stocks of goods held in the household between shopping trips. The necessity for storage permits the theory to include an endogenous choice of capacity to store as well as choices among consumption, leisure, and shopping trip frequency. By use of duality theory, the comparative static effects of price, wage, and trip costs are examined. Production and transformation within the household are integrated into the model and shown to be covered by the dual approach.     

What is the role of the asking price for a house?

This paper considers the role of the asking price in housing transactions both theoretically and empirically. Significant fractions of housing transactions involve sales prices that are either below or above asking price, which might suggest that asking price has limited relevance. However, many housing transactions involve a sales price exactly equal to asking price (a fact that has previously drawn little notice), strongly suggesting that asking price does matter. The paper develops a model where asking price is neither a binding commitment nor a ceiling, yet still directs buyer search and impacts sales price. Using novel survey data, the paper provides empirical evidence consistent with asking price playing a directing role in buyer search. Consistent with theory, this effect is stronger for more atypical houses and in bust markets.     

INTERNATIONAL TRADE IN MINING PRODUCTS

Abstract The increase in mineral price volatility since 1970 and worries about the impact of rapidly growing mineral exports on the economic growth of developing countries have created recent interest in mineral trade flows and policies. This paper provides a review of current thinking on the economics of international trade in mining products. Despite mining products’ importance in early formulations of trade theory, there have been relatively few studies that have specifically examined mining product trade flows. The limited evidence that exists supports the idea that factor endowment differences explain much mining product trade. There is some apparent South–South and intra‐industry trade in mining products, but we find no need to resort to the ‘new trade theory’ to explain this. Given worries of substandard growth and development in mining‐based economies, trade policies have been used to try to accelerate the movement towards resource‐based manufacturing. In the light of recent evidence that mining product exporters have not suffered in the long‐run from mining activity, these policies are likely to have been unwarranted. Nevertheless, there is some evidence that the more closed mining economies have had faster growth than the open mining economies, reflecting correction of a political economy trap that causes open mining economies to under‐invest in education.     

Retail market structure and the threat by the manufacturer to sell goods directly to the consumer

When a manufacturer and its retailers and consumers are spatially separated, the retailers’ market size may be limited by the manufacturer who provides consumers with an option to purchase goods directly from them. The manufacturer uses this tactic to increase profit when a few retailers dominate the market. The mill price of a manufacturer, that is, the price of the good at delivery from a manufacturer’s factory, is critical under these circumstances.If the manufacturer charges a franchise fee, thus absorbing the retailer’s profit, this fee is a function of the mill price. Mill price policy can be used to maximize profit on the sale of goods and collection of the franchise fee. The resulting retail market structure becomes preferable for the manufacturer and consumers since the manufacturer’s profit is larger, as is the quantity purchased, compared with a competitive equilibrium in which every firm entering the market area is assumed to move its location instantly without cost.     

Land use in a circular city: Some numerical results

In a previous paper (“Land Use in a Circular City”, Journal of Economic Theory, 1974), I considered efficient land use and travel patterns in a circular city consisting of a homogeneous economic activity and a network of radial and circumferential roads. My analysis assumed that under decentralized optimum conditions, the price of traveling circumferentially through a radian would increase with distance from the city center. Under this and a second pricing assumption, an optimum would involve either restricting inward trip penetration or providing travelers with an inner ring road. This paper provides numerical illustrations of the optimum when trip penetration is restricted. The results suggest that the underlying pricing assumptions are likely not valid.     

An empirical investigation of the effects of impact fees on housing and land markets

This paper presents the results from estimating the effects of development impact fees on the prices of new and existing single-family homes and undeveloped residential land using unique data for Dade County, FL. The results show that an additional US$1.00 of fees increases the price of both new and existing housing by about US$1.60 and reduces the price of land by about US$1.00. These findings are shown to be consistent with the new view but not the old view theory of impact fee incidence.     

北京市占道施工收费标准调整研究

占道施工使原本就很拥挤的道路拥堵情况加剧,影响了居民的出行和正常的经济和社会活动的运转。因此,对这些占道施工进行一定的收费,无论是从占用社会公共资源进行补偿的角度,还是从影响正常社会经济活动的角度都是必要的。本文分析总结了占道施工分类情况及其对道路交通的影响,并结合目前北京市占道施工收费特点,依据地区经济发展程度和道路交通受影响程度,提出了占道施工收费标准调整的思路与测算方法。     

An exploration of factors influencing the choice of commodity price risk mitigation strategies

Most firms are exposed to price volatility associated with commodities, which can significantly affect the price paid for raw materials, energy, packaging, shipping, and component purchases. Commodity price risk represents the financial, operational and informational effects of commodity price volatility (CPV). The purpose of this paper is to contribute to the supply chain risk management literature by providing a taxonomy of commodity price risk mitigation strategies and factors that may influence the adoption of these strategies. A qualitative study was conducted using a grounded theory approach, based on case studies of companies with home operations in Italy, Germany, and the US. The paper provides some initial evidence for theory and practice as to: 1) how firms can mitigate the risk from CPV by implementing various sourcing, contracting, and financing strategies; and 2) the influence of commodity/product factors, buying organization factors, supply chain factors, and external environment factors on strategy capability and choice.     

Valuation ratios and long‐horizon stock price predictability

Using annual data for 1872–1997, this paper re‐examines the predictability of real stock prices based on price–dividend and price–earnings ratios. In line with the extant literature, we find significant evidence of increased long‐horizon predictability; that is, the hypothesis that the current value of a valuation ratio is uncorrelated with future stock price changes cannot be rejected at short horizons but can be rejected at longer horizons based on bootstrapped critical values constructed from linear representations of the data. While increased statistical power at long horizons in finite samples provides a possible explanation for the pattern of predictability in the data, we find via Monte Carlo simulations that the power to detect predictability in finite samples does not increase at long horizons in a linear framework. An alternative explanation for the pattern of predictability in the data is nonlinearities in the underlying data‐generating process. We consider exponential smooth‐transition autoregressive models of the price–dividend and price–earnings ratios and their ability to explain the pattern of stock price predictability in the data. Copyright © 2005 John Wiley & Sons, Ltd.     

Monetary effects on nominal oil prices

The paper presents a theory of nominal asset prices for competitively owned oil. Focusing on monetary effects, with flexible oil prices the US dollar oil price should follow the aggregate US price level. But with rigid nominal oil prices, the nominal oil price jumps proportionally to nominal interest rate increases. We find evidence for structural breaks in the nominal oil price that are used to illustrate the theory of oil price jumps. The evidence also indicates strong Granger causality of the oil price by US inflation as is consistent with the theory.     

The use of initial fees and royalties in business-format franchising

This paper provides an explanation of franchising's fee structure, drawing on principal agency and labor economics theory. The predictive framework includes constructs such as channel control, franchisor services, franchisee risk and the franchisor's capital constraints. The empirical investigation of a representative sample of franchise chains indicates that channel control is the major factor influencing the payment design. The results are used to test managerial implications about the use of an optimal fee structure in the growth of chains.     

建设项目成本加酬金合同的激励效用研究

成本加酬金合同是一种常用的建设工程合同类型,应研究其不同激励形式对业主和承包商产生的不同效用.本文基于业主和承包商期望效用,应用委托-代理理论建立了有限责任合同、按固定份额分成合同、按约定公式分成合同等三类合同模式的激励模型.采用规划方法求出模型最优解、并讨论分析激励的实施效用.通过测算各种情况下各模式对业主和承包商的效用,经过求解不等式,可比较出各效用的大小,并可推广到固定总价合同模式.通过建立合同激励模型可进行效用测算,能帮助业主设计既能吸引承包商参与又能扩大业主自身效用的合同模式;也能帮助承包商识别并参与对自身效用较大的合同.