Big data from dynamic pricing: A smart approach to tourism demand forecasting

Suppliers of tourist services continuously generate big data on ask prices. We suggest using this information, in the form of a price index, to forecast the occupation rates for virtually any time-space frame, provided that there are a sufficient number of decision makers “sharing” their pricing strategies on the web. Our approach guarantees great transparency and replicability, as big data from OTAs do not depend on search interfaces and can facilitate intelligent interactions between the territory and its inhabitants, thus providing a starting point for a smart decision-making process. We show that it is possible to obtain a noticeable increase in the forecasting performance by including the proposed leading indicator (price index) into the set of explanatory variables, even with very simple model specifications. Our findings offer a new research direction in the field of tourism demand forecasting leveraging on big data from the supply side.     

THE USE OF PPP ARRANGEMENTS IN STREET LIGHTING: A WIN‐WIN OPTION?

Street lighting is a classic example of a public good, and governments are extensively involved in its provision. Adequate lighting facilitates both car traffic and personal safety while improving an urban area's character. However, many systems are mismanaged and obsolete, incurring high energy costs and emissions with relatively low lighting quality. Public authorities facing budget constraints often find retrofitting old street‐lighting systems challenging. They have two options: either direct in‐house, public‐authority renovation or contracting with a private company through a public–private partnership (PPP). Although private‐sector‐participation approaches vary, most public authorities can now enter into a street‐light modernization PPP agreement. That can be a win‐win option for both the public and private sectors. The upfront investment is small and operational expenses outweigh capital expenses, generating lower payback periods and energy‐cost reduction with light‐emitting diode (LED) technology. Little public expenditure is necessary when private partners are compensated via shared energy savings. We analyze the Detroit street‐light PPP – the United States’ first – and find that PPPs are practical for retrofitting US street lights and in other countries where they are antiquated.     

On the Effect of Skewness and Kurtosis Misspecification on the Hedging Error

Using a result in Angelini and Herzel (2009a) , we measure, in terms of variance, the cost of hedging a contingent claim when the hedging portfolio is re‐balanced at a discrete set of dates. We analyse the dependence of the variance of the hedging error on the skewness and kurtosis as modeled by a Normal Inverse Gaussian model. We consider two types of strategies, the standard Black–Scholes Delta strategy and the locally variance‐optimal strategy, and we perform some robustness tests. In particular, we investigate the effect of different types of model misspecification on the performance of the hedging, like that of hedging without taking skewness into account. Computations are performed using a Fast Fourier Transform approach.     

Effects of personal characteristics on organizational commitment: evidence from Brazil's oil and gas industry

In 1997, Brazil's major energy company faced a loss of its monopoly as part of the country's structural reform. Many of its employees were recruited by new entrants to the oil and gas industry. In order to retain employees, the company initiated a multiyear planning process which included a redesigned human resource management model oriented to organizational commitment. This study examines the long-term influence of five employee personal characteristics (type of employment, job level, gender, education level and service time) on the affective, normative and continuance components of organizational commitment. The research was conducted in one of the company refinery and involved a questionnaire survey of all employees and interviews with senior managers. It was found that type of employment (company staff or contractor) had the greatest impact on affective and normative commitment, while service time and education level are the most significant contributors to continuance commitment. Gender and job level were found to have limited implication for commitment. The results demonstrate that the company response to structural reform had the long-term positive effect of binding employees to the organization.     

Cartel size and collusive stability with non-capitalistic players

A well established belief both in the game-theoretic IO and in policy debates is that market concentration facilitates collusion. We show that this piece of conventional wisdom relies upon the assumption of profit-seeking behaviour, for it may be reversed when firms pursue other plausible goals. To illustrate our intuition, we investigate the incentives to tacit collusion in an industry formed by labour-managed (LM$LM$) enterprises. We characterise the perfect equilibrium of a supergame in which LM$LM$ firms play an infinitely repeated Cournot game under grim trigger strategies. We show that the critical threshold of the discount factor above which collusion is stable (i) is lower in the LM$LM$ industry than in the capitalistic one; (ii) monotonically decreases with the number of firms.     

Optimal access regulation with downstream competition

We analyze the setting of access prices for a bottleneck facility where the facility owner also competes in the deregulated downstream market. We consider a continuum of market structures from Cournot to Bertrand. These market structures are fully characterized by a single parameter representing the intensity of competition. We first show how the efficient component pricing rule should be modified as the downstream competitive intensity changes. We then analyse the optimal access price where a regulator trades off production efficiency and pro-competitive effects to maximize total surplus.     

Employing the business model concept to support the adoption of product–service systems (PSS)

Although the existing literature indicates that the business model concept can be useful to implement product–service systems (PSS), there is still a paucity of guidelines to assist companies in this respect. Therefore, this paper proposes a framework to support the adoption of PSS employing the business model concept. This framework was developed based on literature review and intends to guide the company on the analysis of their business context, on the choice of the appropriate type of PSS and on the definition of their PSS characteristics. A single case study was then performed to illustrate an application of the framework in a machine tool manufacturer and provide research insights. Overall, results indicate that the framework can provide companies with a useful reference to PSS implementation, helping on the investigation of different PSS scenarios as well as the main barriers and challenges to be overcome.     

The Impact of Price Regulation on the Cost of Capital

This paper investigates how price regulation under moral hazard can affect a regulated firm's cost of capital. We consider stylized versions of the two most typical regulatory frameworks that have been applied in the most recent decades by regulators: Price Cap and Cost of Service. We show that there is a trade‐off between lower operational costs and a higher cost of capital under Price Cap regulation and higher operational costs and a lower cost of capital under Cost of Service regulation. As a result, when the extent of moral hazard is not significant, Price Cap regulation generates lower welfare than does Cost of Service regulation.     

Strategic Interaction amongst Australia's East Coast Ports

Australia's principal container ports, located in its state capitals, are owned and operated by state authorities that largely return profits from port operations to state governments. Since they govern the volumes of trade in most merchandise, they command immense influence over the openness and flexibility of the national economy. In this study, we estimate the elasticities of substitution between container services of ports in Brisbane, Sydney and Melbourne. We also examine the pricing of port services to estimate the extent of their interaction, from which we derive conjectural variations parameters to assess the actual and potential levels of price collusion. The results confirm the conventional wisdom that the degree of substitution between the major east coast ports is small. While this highlights the possibility that these ports possess substantial market power, actual mark ups are considerably smaller than the predicted mark ups, suggesting that the ports' localised monopoly power is constrained by factors other than price competition.     

A model of seller holdout

Summary. We model a buyer who wishes to combine objects owned by two separate sellers in order to realize higher value. Sellers are able to avoid entering into negotiations with the buyer, so that the order in which they negotiate is endogenous. Holdout occurs if at least one of the sellers is not present in the first round of negotiations. We demonstrate that complementarity of the buyers technology is a necessary condition for equilibrium holdout. Moreover, a rise in complementarity leads to an increased likelihood of holdout, and an increased efficiency loss. Applications include patents, the land assembly problem, and mergers.Received: 20 November 2002, Revised: 4 September 2003JEL Classification Numbers: L14, L21, C78.Correspondence to: Flavio MenezesThis paper benefited from insights by Paulo Monteiro. Thanks to seminar participants at the ANU, the University of Sydney and the University of Arizona. Murali Agastya, Robert Innes, John Quiggin, Kunal Sengupta and anonymous referees provided useful feedback. F. Menezes gratefully acknowledges the support of ARC grant (no. 000000055). Pitchford is grateful for the use of economics department facilities while a visiting scholar at Harvard University.