Optimal advertisement-innovation mix for maximizing the discounted flow of profit

Due to boom in telecommunications market, there is hectic competition among the cellular handset manufacturers. As cellular manufacturing industry operates in an oligopoly framework, often price-rigidity leads to non-price wars. The handset manufacturing firms indulge in product innovation and also advertise their products in order to achieve their objective of maximizing discounted flow of profit. It is of interest to see what would be the optimal advertisement-innovation mix that would maximize the discounted How of profit for the firms. We used differential game theory to solve this problem. We adopted the open-loop solution methodology. We experimented for various scenarios over a 30 period horizon and derived interesting managerial insights.

An experiment on spatial competition with endogenous pricing

Hotelling's (1929) principle of minimum differentiation and the alternative prediction that firms will maximally differentiate from their rivals in order to relax price competition have not been explicitly tested so far. We report results from experimental spatial duopolies designed to address this issue. The levels of product differentiation observed are systematically lower than predicted in equilibrium under risk neutrality and compatible with risk aversion. The observed prices are consistent with collusion attempts. Our main findings are robust to variations in three experimental conditions: automated vs. human market sharing rule for ties, individual vs. collective decision making, and even vs. odd number of locations.

Buyer-supplier relationships and brand strategy within commoditised industries : a suggested theoretical framework

Research into commodity markets has identified an increase in non-price based competition. In pursuit of sustainable bases for differentiation, many commodity industries including fresh produce, dairy and meat are introducing branded products. Using the Resource-Based View (RBV), this paper postulates that such branding is influenced by the nature of the buyer-supplier relationship. We suggest that the individual resources and capabilities of trade partners, in addition to the capabilities of that relationship, influence the brand strategies pursued. Moreover, we propose that by combining organisational resources and capabilities and brand strategy in an holistic framework, we may explain variations in buyer-supplier relationship performance.

High prices for generics in Australia : more competition might help

It is commonly believed that dispensed prices of medicines in Australia are substantially lower than those in other developed countries, particularly the US. This article reports the results of an analysis comparing dispensed prices for the most commonly prescribed and the highest cost items in Australia with dispensed prices in the US. Although a large majority of items are less expensive in Australia than in the US, Australian prices are higher for a substantial number of products, particularly generic drugs. This article examines various policies affecting the pricing of generics in Australia. It is postulated that the main cause for higher prices for a substantial number of generic products is the lack of price competition. This results from government policy which ensures that a price reduction by one company is communicated immediately to all competitors in that market along with an invitation to match the reduced price. The dominant strategy for all suppliers is to only reduce their price in response to a reduction in price by a competitor. The result is a lack of differentiation in pricing across brands of a medicine on the Schedule of Pharmaceutical Benefits. The government could improve the structure of the generics market and encourage greater competition by ceasing to disclose competitor firms’ offers to other competitors. The government could conduct pricing reviews of each generic product relatively infrequently (eg, only once annually or every 18 months). At the time of the pricing review, the government would request confidential offers on price for a generic from all players in the market. Brands should then all be listed under the Pharmaceutical Benefits Scheme (PBS) at the offered price. Prices offered by the individual supplier would apply until the next pricing review. The PBS would continue to subsidise up to the price of the lowest priced brand, with brand premiums applying to all brands priced higher than the benchmark price. Such an approach would provide opportunity for players in the market to capture market share by being thelowest priced brand.

Price elasticity of Central American agricultural exports

Includes bibliography

Putting service relations to the test:how can negative consumer reactions of price increases be reduced?

Price increases seem to be an adequate way to improve the earnings of companies. This fact becomes especially crucial because of increased price competition in many markets. Price increases might lead to negative customer reactions, such as a lower perceived utility or a lower loyalty intention. Therefore, the question for managers remains how prices can be increased without losing customers. Results of our experimental study suggest that customers of energy suppliers rate the perceived utility of the offer relatively better when the price increase is combined with an additional modification of the product or accompanied by a new service. It becomes clear that intensifying service relations can offset the negative effects of price increases.

Shareholder ratification of the auditor and audit market competition

In my dissertation, I examine factors associated with firms’ submission of auditor selection for shareholder ratification and test if shareholder ratification of auditor selection is associated with the extent of price competition in the audit market (as measured by audit fees) and audit quality (as measured by clients’ earnings management). The dissertation is motivated from the recent recommendation of the U.S. Treasury’s Advisory Committee on Auditing Profession (ACAP) regarding the submission of auditor selection for shareholder ratification votes. The ACAP suggests that this practice may improve the competition in the audit market; yet, there is no empirical evidence supporting the ACAP’s recommendation. My dissertation attempts to fill the gap in the literature on an issue of current interest to the auditing profession. I find that firm size, CEO-Chair duality, insider ownership and institutional ownership are associated with the submission of auditor selection for shareholder ratification vote. However, I do not find an association between audit committee variables and the submission of auditor selection for shareholder ratification vote. The second essay investigates the association between auditor ratification and audit fees. Audit fees are higher in firms that submit auditor selection for shareholder ratification. The finding is not consistent with the increased price competition predicted by the ACAP. The third essay of my dissertation examine whether the submission of auditor selection for shareholder ratification is associated with earnings management. I find that firms that submit auditor selection for shareholder ratification are more likely to have lower level of earnings management. Overall, the results suggest that the same factors that are associated with higher quality monitoring also may be associated with the submission of auditor selection for shareholder ratification vote. The results call into question the one-size-fits-all approach recommended by the ACAP.

Shareholder Ratification of The Auditor and Audit Market Competition

In my dissertation, I examine factors associated with firms’ submission of auditor selection for shareholder ratification and test if shareholder ratification of auditor selection is associated with the extent of price competition in the audit market (as measured by audit fees) and audit quality (as measured by clients’ earnings management). The dissertation is motivated from the recent recommendation of the U.S. Treasury’s Advisory Committee on Auditing Profession (ACAP) regarding the submission of auditor selection for shareholder ratification votes. The ACAP suggests that this practice may improve the competition in the audit market; yet, there is no empirical evidence supporting the ACAP’s recommendation. My dissertation attempts to fill the gap in the literature on an issue of current interest to the auditing profession. I find that firm size, CEO-Chair duality, insider ownership and institutional ownership are associated with the submission of auditor selection for shareholder ratification vote. However, I do not find an association between audit committee variables and the submission of auditor selection for shareholder ratification vote. The second essay investigates the association between auditor ratification and audit fees. Audit fees are higher in firms that submit auditor selection for shareholder ratification. The finding is not consistent with the increased price competition predicted by the ACAP. The third essay of my dissertation examine whether the submission of auditor selection for shareholder ratification is associated with earnings management. I find that firms that submit auditor selection for shareholder ratification are more likely to have lower level of earnings management. Overall, the results suggest that the same factors that are associated with higher quality monitoring also may be associated with the submission of auditor selection for shareholder ratification vote. The results call into question the one-size-fits-all approach recommended by the ACAP.

As assessment of the Competition Commission Report and subsequent outcomes

Following the Office of Fair Trading's review of the British deregulated bus market as a whole in 2009, the issues raised were referred to the Competition Commission. Its final report was published in December 2011. Subsequently, the House of Commons Transport Committee carried out an enquiry into the Commission's report, and reactions to it by the operating industry, user groups, and other bodies, which was published in September 2012. A number of major issues have been raised, including the extent to which price competition may be effective, the appropriate rate of return on capital that would be expected within the industry (and appropriate actions where this is excessive in practice), and industry structure. The importance of competition per se, as distinct from attributes of direct concern to users (such as reliability, frequency, and fares) has also been debated. This paper reviews the issues raised, and outcomes to date, in the light of further evidence on the industry's performance. It is demonstrated similar rates of return could be attained through very different operating strategies, which in turn have very different implications for changes in consumer surplus. The alternative uses made of such profits (for example through reinvestment) may also have markedly different impacts effects on users. Rather than focussing on the dangers of excessive rates of return on capital, the outcomes for service users should be the main issue.

Strategic interactions of urban land developers in the housing market

This thesis studies the supply side of the housing market taking into account the strategic interactions that occur between urban land developers. The thesis starts by reviewing the literature on new housing supply, concluding that there are very few studies where strategic interactions are taken into account. Next, we develop a model with two urban land developers, who rst decide the quality of housing and then compete in prices, considering that the marginal production costs depend on the housing quality. First, we analyze the price competition game and characterize the Nash equilibrium of the price game. Finally, we examine the rst stage of the game and determine numerically the subgame perfect Nash equilibrium (SPNE) of the quality-price game. In the price competition game, our results show that the equilibrium price of an urban land developer is an increasing function of its own quality, while it is a non-monotonic function of the rival s quality. The behavior of the equilibrium pro ts reveals that, in general, urban land developers gain by di¤erentiating their quality. However, the urban land developer located at the Central Business District (CBD), may prefer to have the same quality than the rival when transportation costs are high by exploiting its locational advantage. The analysis of the rst stage of the game also reveals that, in general, the rms best response is to di¤erentiate their quality and that, in most cases, there are two subgame perfect Nash equilibria that involve quality di¤erentiation. However, the results depend on transportation costs and the quality valuation parameter. For small quality valuations, in equilibrium, the market is not fully covered and, if the unit transportation costs are high, only the urban land developers located at the CBD operates. For higher quality valuations, all the consumers are served. Furthermore, the equilibrium qualities and pro ts are increasing with quality valuation parameter. RESUMO: Esta tese estuda a oferta no mercado da habitação, tendo em conta as interações es- tratégicas que ocorrem entre os produtores de habitação. A tese revê a literatura sobre a oferta de habitação, concluindo que existem poucos estudos que tenham tido em conta as interações estratégicas. De seguida, desenvolvemos um modelo com dois produtores de habitação, que primeiro decidem a qualidade da habitação e depois competem em preços, considerando que os custos marginais de produção dependem da qualidade. Primeiro analisamos o jogo em preços e caracterizamos o equilíbrio de Nash. Posteriormente, ex- aminamos o primeiro estágio do jogo e determinamos numericamente o equilíbrio perfeito em todos os subjogos (SPNE) do jogo. No jogo de competição em preços, os resultados mostram que, o preço de equilíbrio, é uma função crescente da qualidade da habitação, sendo uma função não monótona da qualidade do rival. O lucro de equilíbrio revela que, geralmente, os produtores de habitação têm ganhos em diferenciar a qualidade. No entanto, o produtor localizado no Centro (CBD), pode preferir oferecer a mesma qualidade que o rival, caso os custos unitários de transporte sejam elevados, através da sua vantagem de localização. A análise do primeiro estágio do jogo, revela que, geralmente, a melhor resposta de um produtor é a de diferenciar a qualidade. Na maior parte dos casos existem dois SPNE que envolvem essa diferenciação. No entanto, os resultados dependem dos custos unitários de transporte e da valorização da qualidade por parte do consumidor. Para uma reduzida valorização da qualidade, em equilíbrio, o mercado não é totalmente coberto e, se o custo unitário de transporte é elevado, apenas o produtor localizado no CBD opera no mercado. Para uma valorização elevada da qualidade, todos os consumidores são servidos. Além disso, as qualidades e os lucros de equilíbrio são crescentes com a valorização da qualidade.

Examining the use of bid information in predicting the contractor’s performance

Purpose – The purpose of this paper is to examine the use of bid information, including both price and non-price factors in predicting the bidder’s performance. Design/methodology/approach – The practice of the industry was first reviewed. Data on bid evaluation and performance records of the successful bids were then obtained from the Hong Kong Housing Department, the largest housing provider in Hong Kong. This was followed by the development of a radial basis function (RBF) neural network based performance prediction model. Findings – It is found that public clients are more conscientious and include non-price factors in their bid evaluation equations. With the input variables used the information is available at the time of the bid and the output variable is the project performance score recorded during work in progress achieved by the successful bidder. It was found that past project performance score is the most sensitive input variable in predicting future performance. Research limitations/implications – The paper shows the inadequacy of using price alone for bid award criterion. The need for a systemic performance evaluation is also highlighted, as this information is highly instrumental for subsequent bid evaluations. The caveat for this study is that the prediction model was developed based on data obtained from one single source. Originality/value – The value of the paper is in the use of an RBF neural network as the prediction tool because it can model non-linear function. This capability avoids tedious ‘‘trial and error’’ in deciding the number of hidden layers to be used in the network model. Keywords Hong Kong, Construction industry, Neural nets, Modelling, Bid offer spreads Paper type Research paper

Section 46(1) and 46(1AA) of the TPA : the struggle of the small against the large

The purpose of this article is to highlight the conflict in the policy objectives of subs 46(1) and subs 46(1AA) of the Trade Practices Act 1974 (Cth) (TPA). The policy objective of subs 46(1) is to promote competition and efficient markets for the benefit of consumers (consumer welfare standard). It does not prohibit corporations with substantial market power using cost savings arising from efficiencies such economies of scale or scope, to undercut small business competitors The policy objective of 46(1AA), on the other hand, is to protect small business operators from price discounting by their larger competitors.. Unlike subs 46(1), it does not contain a ‘taking advantage’ element. It is argued that subs 46(1AA) may harm consumer welfare by having a chilling effect on price competition if this would harm small business competitors.

Technology strategy and competitive performance in bridge construction

Pragmatic construction professionals, accustomed to intense price competition and focused on the bottom line, have difficulty justifying investments in advanced technology. Researchers and industry professionals need improved tools to analyze how technology affects the performance of the firm. This paper reports the results of research to begin answering the question, “does technology matter?” The researchers developed a set of five dimensions for technology strategy, collected information regarding these dimensions along with four measures of competitive performance in five bridge construction firms, and analyzed the information to identify relationships between technology strategy and competitive performance. Three technology strategy dimensions—competitive positioning, depth of technology strategy, and organizational fit—showed particularly strong correlations with the competitive performance indicators of absolute growth in contract awards and contract award value per technical employee. These findings indicate that technology does matter. The research also provides ways to analyze options for approaching technology and ways to relate technology to competitive performance for use by managers. It also provides a valuable set of research measures for technology strategy.

Selection of project procurement methods in the consumer electronics industry : a Hong Kong study

Under pressure from both the ever increasing level of market competition and the global financial crisis, clients in consumer electronics (CE) industry are keen to understand how to choose the most appropriate procurement method and hence to improve their competitiveness. Four rounds of Delphi questionnaire survey were conducted with 12 experts in order to identify the most appropriate procurement method in the Hong Kong CE industry. Five key selection criteria in the CE industry are highlighted, including product quality, capability, price competition, flexibility and speed. This study also revealed that product quality was found to be the most important criteria for the “First type used commercially” and “Major functional improvements” projects. As for “Minor functional improvements” projects, price competition was the most crucial factor to be considered during the PP selection. These research findings provide owners with useful insights to select the procurement strategies.

Conceptualizing and measuring brand relationship quality

Many consumer markets are now characterized by a high degree of market saturation and an increasing level of competition, in particular from retailer brands. Furthermore, consumers face an ever increasing level of product variety. For instance, about 30,000 new products in the fast moving consumer goods (FMCG) market have been launched in Germany in a single year representing about 600 products per week. The increasing number of consumer brands thus has led to a form of “brand inflation” in FMCG markets. In addition, the role of consumers in the marketplace has changed as well. Consumers are more price sensitive, they have higher expectations with regard to product quality and customer service, and they rely rather on word-of-mouth communication than on traditional advertising. In addition, it appears that consumers have become more critical with regard to the perception of brands. High levels of price competition have led to a decreasing level of brand awareness and increased switching intentions of brands. As a consequence, the role of customer loyalty has become an increasingly important topic for businesses in consumer markets.