What Price Social and Health Care? Commodities, Competition and Consumers

In this paper we explore some important disputes and problems surrounding the legal status and social purpose of Health

Price Delegation in Sales Organizations: An Empirical Investigation

The allocation of decision rights is an integral component of designing organizational architecture. Economists have long understood the importance of co-locating decision rights with the knowledge that is valuable to those decisions. Following this prescription, marketing scholars have developed strong theoretical arguments in favor of delegating pricing authority to the sales force. Empirical work, however, reveals a significant number of sales organizations yielding only minimal authority to their salespeople. Given this divergence between theory and practice, we develop and empirically test two mitigating factors that could potentially explain why firms restrict pricing authority. We test our hypotheses on a sample of 222 German sales organizations and find that the data are generally consistent with our conceptualization.

Tariff-Specific Preferences and Their Influence on Price Sensitivity

For many services, consumers can choose among a range of optional tariffs that differ in their access and usage prices. Recent studies indicate that tariff-specific preferences may lead consumers to choose a tariff that does not minimize their expected billing rate. This study analyzes how tariff-specific preferences influence the responsiveness of consumers’ usage and tariff choice to changes in price. We show that consumer heterogeneity in tariff-specific preferences leads to heterogeneity in their sensitivity to price changes. Specifically, consumers with tariff-specific preferences are less sensitive to price increases of their preferred tariff than other consumers. Our results provide an additional reason why firms should offer multiple tariffs rather than a uniform nonlinear pricing plan to extract maximum consumer surplus.

Target Price Accuracy

This study analyzes the accuracy of forecasted target prices within analysts’ reports. We compute a measure for target price forecast accuracy that evaluates the ability of analysts to exactly forecast the ex-ante (unknown) 12-month stock price. Furthermore, we determine factors that explain this accuracy. Target price accuracy is negatively related to analyst-specific optimism and stock-specific risk (measured by volatility and price-to-book ratio). However, target price accuracy is positively related to the level of detail of each report, company size and the reputation of the investment bank. The potential conflicts of interests between an analyst and a covered company do not bias forecast accuracy.

The price elasticity of demand for common stock

We study the price elasticity of demand for the common stock of an individual corporation. Despite the prevelance of assumptions that demand is perfectly elastic, there is little if any direct evidence in the literature to either support or reject that contention. Consistent with the notion of finite price elasticities, we find that the announcement of primary stock oferings by regulated firms depresses their stock prices and little if any evidence that this decline is the result of adverse information about future cash flows. Attempts to relate offer announcement effects directly to possible determinants of price elasticities, however, are inconclusive.

Potential Economic Returns from Selling Beef in a Specified Value-Based Market

Three groups of steers--one theoretical group and two experimental groups—were evaluated for marketing cattle live, as boxed beef, and grade and yield when the live price was $71 to $73/cwt, grade and yield price $125/cwt for Choice yield grade 3 carcasses with $20/cwt discount for Select carcasses, and in a commodity-trim or close-trim boxed beef market. The results show that the value of highyielding steers can be significantly increased if sold in a close-trim boxed beef market. The close-trim premiums ranged from $5.06 per head for Select close-trim yield grade 4 carcasses to $87.18 per head for close-trim Choice yield grade 1 carcasses. A group of experimental steers averaging 82% Choice and 60% yield grades 1 and 2 returned an additional $104 in the close-trim boxed market compared with selling live for $73/cwt. Another group of experimental steers averaging 21% Choice, 18% Standard, and 93% yield grades 1 and 2 had $29 per head greater return than if the steers had been sold live for $71/cwt. These comparisons emphasize the importance of knowing how cattle will potentially grade before selecting an alternative marketing strategy. This prior knowledge is most important when the spread in price between Choice and Select is high. Producers need to learn more about their cattle to predict how the cattle may grade for a specified value-based market.

Use of Ultrasound Backfat Estimates to Form Marketing Groups Prior to Finishing for Feedlot Steers

An experiment was conducted using 95 Continental crossbred steers. The cattle were sorted by ultrasound 160 days before slaughter into a low backfat group (Low BF) and a higher backfat group (High BF). Half of the Low BF and half of the High BF were implanted whereas the other halves were not. Data from the experiment were used in two hypothetical markets. One market was a high yield beef program (HY) that did not allow the use of implants. The second market was a commodity beef program (CM) that allowed the use of implants. The cattle were priced as an unsorted group (ALL) and two sorted groups (Low BF and High BF) within the HY (non-implanted) and CM (implanted) markets. The CM program had a base price of $1.05/lb hot carcass weight (HCW) with a $0.15/lb HCW discount for quality grade (QG) Select and a $0.20/lb HCW discount for yield grade (YG) 4. The HY program used a base price of $1.07/lb HCW with premiums ($/lb HCW) paid for YG £ .9 (.15), 1.0 - 1.4 (.10), and 1.5 - 1.9 (.03). The carcasses were discounted ($/lb HCW) for YG 2.5 - 2.9 (.03), 3.0 - 3.9 (.15), and ³ 4.0 (.35). This data set provides good evidence that the end point at which to sell a group of cattle depends on the particular market. Sorting had an economic advantage over ALL in the HY Low BF and the CM High BF groups. The HY High BF cattle should have been sold sooner due to the discounts recieved for increased YG. The increased YG was directly affected by an increase in BF. Furthermore, the CM Low BF group should have been fed longer to increase the number of carcasses grading Choice.

Adaptation to Changes in the Coffee Value Chain and the Price of Coiffee among Coffee Producers in Two Villages in Kilimanjaro, Tanzania

Market liberalization in Tanzania has eroded the monopoly of the cooperative unions by allowing private coffee buyers (PCBs) to compete with them on equal footing. Similarly, farmers groups and primary societies are now allowed to sell coffee at auction. Thus, farmers have various options for selling their coffee. Similarly, the coffee industry has experienced large fluctuations in prices and stagnation in production. How do farmers react to these changes? Can and do farmers profit from different market conditions and sell to different traders at the lower end of the value chain, or do they remain with cooperatives or farmers groups? This study was conducted in Mruwia and Mshiri villages in Moshi Rural district. Whereas Mshiri village remains attached to the Kilimanjaro Native Cooperative Union (KNCU), Mruwia has detached from this organization and sells coffee independently. The sample (103) was randomly selected from the coffee farmers in the two villages. Data were collected through surveys, focus group discussions (FGDs), and socio-anthropological methods (participant-observation, biographies, and thematic interviews). Results indicate that the selection of whom to sell coffee depends largely on farmers’ dependence on coffee and prices, other benefits accrued, and whether the initial costs are covered by buyers. Additionally, most respondents did not sell coffee to PCBs. Thus, prices, the institutional infrastructure, and the structure of local communities were important when making decisions about how and with whom to trade.

Why Some People Discount More than Others: Baseline Activation in the Dorsal PFC Mediates the Link between COMT Genotype and Impatient Choice

Individuals differ widely in how steeply they discount future rewards. The sources of these stable individual differences in delay discounting (DD) are largely unknown. One candidate is the COMT Val158Met polymorphism, known to modulate prefrontal dopamine levels and affect DD. To identify possible neural mechanisms by which this polymorphism may contribute to stable individual DD differences, we measured 73 participants' neural baseline activation using resting electroencephalogram (EEG). Such neural baseline activation measures are highly heritable and stable over time, thus an ideal endophenotype candidate to explain how genes may influence behavior via individual differences in neural function. After EEG-recording, participants made a series of incentive-compatible intertemporal choices to determine the steepness of their DD. We found that COMT significantly affected DD and that this effect was mediated by baseline activation level in the left dorsal prefrontal cortex (DPFC): (i) COMT had a significant effect on DD such that the number of Val alleles was positively correlated with steeper DD (higher numbers of Val alleles means greater COMT activity and thus lower dopamine levels). (ii) A whole-brain search identified a cluster in left DPFC where baseline activation was correlated with DD; lower activation was associated with steeper DD. (iii) COMT had a significant effect on the baseline activation level in this left DPFC cluster such that a higher number of Val alleles was associated with lower baseline activation. (iv) The effect of COMT on DD was explained by the mediating effect of neural baseline activation in the left DPFC cluster. Our study thus establishes baseline activation level in left DPFC as salient neural signature in the form of an endophenotype that mediates the link between COMT and DD.