Use of Linear Programming to Find an Envy-Free Solution Closest to the Brams–Kilgour Gap Solution for the Housemates Problem

Although the Gap Procedure that Brams and Kilgour (2001) proposed for determining the price of each room in the housemates problem has many favorable properties, it also has one drawback: Its solution is not always envy-free. Described herein is an approach that uses linear programming to find an envy-free solution closest (in a certain sense) to the Gap solution when the latter is not envy-free. If negative prices are allowed, such a solution always exists. If not, it sometimes exists, in which case linear programming can find it by disallowing negative prices. Several examples are presented.     

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Francesca Cornelli, Richard D'Aveni, Andrew Kakabadse, Rosabeth Moss Kanter, Markus Reitzig, Fons Trompenaars and Kim Warren share their latest research.     

Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates

This paper applies a novel empirical approach to characterising the horizontal‐ness and vertical‐ness of affiliates based on Yeaple's complex FDI concept. In its simplest form, horizontal‐ness is measured as affiliates’ local sales share while their vertical‐ness is measures as their share of non‐local sourcing of intermediates. Japanese affiliates in most sectors and nations are partly vertical and partly horizontal, but those in North American are far more ‘horizontal’ than those in the EU and Asia. Affiliates became more vertical between 1996 and 2005. A four‐way sales and sourcing split (host, home, regional and RoW) suggests that affiliates act as nodes in regional production networks – especially in Asia. We posit several hypotheses that could be tested with our empirical approach.     

How Does the FOMC Learn About Economic Revolutions? Evidence from the New Economy Era, 1994–2001

Forecasting is a daunting challenge for business economists and policymakers, often made more difficult by pervasive uncertainty. One such uncertainty is the reaction of policymakers to major shifts in the economy. We explore the process by which the Federal Reserve Open Market Committee (FOMC) came to recognize and react to the productivity acceleration of the 1990s. Initial impressions were formed importantly by anecdotal evidence. Then, FOMC members—and chiefly Federal Reserve Board Chairman Alan Greenspan—came to mistrust the data and the forecasts. Eventually, revisions to published data confirmed initial impressions. Our main conclusion is that the productivity-driven positive supply side shocks of the 1990s were initially viewed favorably. However, over time they came to be viewed as posing a threat to the economy, chiefly through unsustainable increases in aggregate demand growth that threatened to increase inflation pressures. Perhaps nothing so complicates business planning and forecasting as policymakers who initially embrace an unanticipated shift and later come to abhor the same shift.     

Aviation and the environment in the context of the EU–US Open Skies agreement

We examine the impacts of the EU–US Open Skies agreement on the environment on emissions from the aviation sector. We use the Hamburg Tourism Model of domestic and international tourist numbers and flows, to estimate these impacts. The Open Aviation Area will result in increased competition between carriers and falls in the cost of transatlantic flights. This will not only have implications for the size and structure of the industry but also for climate policy. The paper assesses what effects the expected increases in passenger numbers will have on CO₂ emissions and tests whether this increase in travel will result in a corresponding rise in emissions. Simulations show that passenger numbers arriving from the US to the EU will increase by between 1% and 14% depending on the magnitude of the price reductions because of substitution between destinations, the percentage increase in global emissions is much smaller (max. 1%) than the increase in cross-Atlantic traffic.     

Modeling response to repetitive promotional stimuli

Marketers frequently include promotional stimuli which elicit some form of response from the recipient among the tactics used to market products or services. Print ads, including 800 numbers which allow consumers to respond, and direct mail campaigns are examples of such activities. Promotions of this nature are often repeated a number of times, thus providing several opportunities to respond. Understanding consumer response to such campaigns is critical for more efficient design and use of these activities. A conceptual framework of response to repetitive stimuli is proposed, and stochastic models of alternative response patterns are developed. Alternative contexts in which such models are useful are also noted. Variations of the models are provided for those situations when only a fraction of the target population will ever respond. Estimation of model parameters is discussed, and data from actual campaigns are used to demonstrate how to apply the models. He received his Ph.D. in mathematical statistics from Michigan State University. He joined the Terry College of Business after a 15-year career in industry, including 10 years in consumer research at Procter & Gamble. His research interests include discrete choice models, market response to promotional stimuli, forecasting marketing potential from initial sales results, and, in general, applications of quantitative methods to business problems. He has published articles in such journals as theAnnals of Mathematical Statistics, Annals of Statistics, Journal of the Academy of Marketing Science, Journal of Retailing, and theJournal of Advertising. He earned his Ph.D. at Columbia University and has served as assistant and associate professor of marketing at New York University, as visiting assistant professor at Columbia University, and as visiting associate professor at the University of California, Los Angeles. He is a member of the editorial review boards ofMultivariate Behavioral Research andJournal of Marketing Channels. He has published in theJournal of Marketing Research, Journal of Marketing, andManagement Science, among others. His research interests include the study of brand extensions, relationship marketing, strategic alliances, and television program scheduling. He received his Ph.D. in marketing from the University of Georgia. His current research interests include marketing strategy, strategic alliances, relationship marketing, and the implications of new technologies on business research and practice. He has published in various conference proceedings and theInternational Business Review.