Asymmetric price range effects on vertical extensions

Vertical line extensions, both step-up and step-down, are common occurrence in consumer products. For example, Timex recently launched its luxury high-end Valentino line. On the other hand, many companies use downscale extensions to increase the overall sales volume. For instance, a number of luxury watch brands recently introduced watch collections with lower price points, like TAG Heur’s affordable watch the Aquaracer Calibre 5. Previous literature on vertical extensions has investigated how number of products in the line (Dacin and Smith 1994), the direction of the extension, brand concept (Kim, Lavack, and Smith 2001), and perceived risk (Lei, de Ruyter, and Wetzels 2008) affect extensions’ evaluation. Common to this literature is the use of models based on adaptation-level theory, which states that all relevant price information is integrated into a single prototype value and used in consumer judgments of price (Helson 1947; Mazumdar, Raj, and Sinha 2005). In the current research we argue that, while adaptation-level theory can be viewed as a useful simplification to understanding consumers’ evaluations, it misses out important contextual influences caused by a brand’s price range. Drawing on research on range-frequency theory (Mellers and Cooke 1994; Parducci 1965) we investigate the effects of price point distance and parent brand’s price range on evaluations of vertical extensions. Our reasoning leads to two important predictions that we test in a series of three experiments...

Food price volatility and hunger alleviation-can Cannes work

Recent years have seen global food prices rise and become more volatile. Price surges in 2008 and 2011 held devastating consequences for hundreds of millions of people and negatively impacted many more. Today one billion people are hungry. The issue is a high priority for many international agencies and national governments. At the Cannes Summit in November 2011, the G20 leaders agreed to implement five objectives aiming to mitigate food price volatility and protect vulnerable persons. To succeed, the global community must now translate these high level policy objectives into practical actions. In this paper, we describe challenges and unresolved dilemmas before the global community in implementing these five objectives. The paper describes recent food price volatility trends and an evaluation of possible causes. Special attention is given to climate change and water scarcity, which have the potential to impact food prices to a much greater extent in coming decades. We conclude the world needs an improved knowledge base and new analytical capabilities, developed in parallel with the implementation of practical policy actions, to manage food price volatility and reduce hunger and malnutrition. This requires major innovations and paradigm shifts by the global community.

Real-time price based home energy management scheduler

With the recent development of advanced metering infrastructure, real-time pricing (RTP) scheme is anticipated to be introduced in future retail electricity market. This paper proposes an algorithm for a home energy management scheduler (HEMS) to reduce the cost of energy consumption using RTP. The proposed algorithm works in three subsequent phases namely real-time monitoring (RTM), stochastic scheduling (STS) and real-time control (RTC). In RTM phase, characteristics of available controllable appliances are monitored in real-time and stored in HEMS. In STS phase, HEMS computes an optimal policy using stochastic dynamic programming (SDP) to select a set of appliances to be controlled with an objective of the total cost of energy consumption in a house. Finally, in RTC phase, HEMS initiates the control of the selected appliances. The proposed HEMS is unique as it intrinsically considers uncertainties in RTP and power consumption pattern of various appliances. In RTM phase, appliances are categorized according to their characteristics to ease the control process, thereby minimizing the number of control commands issued by HEMS. Simulation results validate the proposed method for HEMS.

kmth price sealed-bid auctions with general independent values and equilibrium linear mark-ups

A generalised bidding model is developed to calculate a bidder’s expected profit and auctioners expected revenue/payment for both a General Independent Value and Independent Private Value (IPV) kmth price sealed-bid auction (where the mth bidder wins at the kth bid payment) using a linear (affine) mark-up function. The Common Value (CV) assumption, and highbid and lowbid symmetric and asymmetric First Price Auctions and Second Price Auctions are included as special cases. The optimal n bidder symmetric analytical results are then provided for the uniform IPV and CV models in equilibrium. Final comments concern implications, the assumptions involved and prospects for further research.

Sustainability Non-Price Incentives and Rewards: A Collaborative Procurement Perspective

Construction scholars suggest that procurement processes can be used as mechanisms to change construction industry practices. This paper discusses industry changes as a response to the calls for integration of sustainability ideals into construction practices. Because major infrastructure construction has been identified as a key producer of greenhouse gas emissions (GHGE), this study explores collaborative procurement models that have been used to facilitate mitigation of GHGE. The study focuses on the application of non-price incentives and rewards that work together as a binary mechanism. Data were collected using mixed-methods: government document content analysis was complemented with data collected through focus groups and individual interviews with both clients and contractors. This report includes examples of greening procurement agendas for three Australian road authorities relating to collaborative procurement project delivery models. Three collaborative procurement models, Alliance Consortium, Early Contractor Involvement and Public Private Partnerships provide evidence of construction projects that were completed early. It can also be argued that both clients and contractors are rewarded through collaborative project delivery. The incentive of early completion is rewarded with reduction of GHGE. This positive environmental outcome, based on a dual benefit and non-price sustainability criteria, suggests a step towards changed industry practices though the use of green procurement models.

A stakeholder analysis of one institution’s assuring learning experience – is the promise and the practice worth the price?

Universities around the world are rushing to implement assurance of learning policies and practices with varying degrees of success. One School investigated its own policy and practice development through the eyes of its key stakeholders to identify whether the practice was worth the price. Findings indicate that although the key stakeholders considered different needs and viewed their experiences differently, value did abound and was in the eye of the beholder.

Australian stock indexes and the four-factor model

Stock indexes are passive 'value-weighted' portfolios and should not have alphas which are significantly different from zero. If an index produces an insignificant alphan, then significant alphas for equity funds using this index can be attributed solely to manager performance. However, recent literature sugests that US Stock indexes can demonstrate significant alphas, which ultimately raise questions regarding equity fund manager performance in both the US and abroad. in this paper, we employ the Carhart four-factor model and newly available Asian-Pacific risk factors to generate alphas and risk factor loadings for eight Australian stock indexes from January 2004 to December 2012. We ifnd that the initial full sample period analysis does not provide indication of significant alphas in the indexes examined. However, by carrying out 36-month rolling regressions, we discover at least four significant alphas in seven of the eight indexes and factor loading variability. As previously reported in the US, this paper confirms similar issues with the four-factor model using Australian stock indexes and performance benchmarking. In effectively measuring Australian equity fund manager performance, it is therefore essential to evaluate a fund's alpha and risk factors relative to the alpha and risk factors of the appropriate benchmark index.

Energy efficient home with price sensitive stochastically programmable TCAs

Introduction of dynamic pricing in present retail market, considerably affects customers with an increased cost of energy consumption. Therefore, customers are enforced to control their loads according to price variation. This paper proposes a new technique of Home Energy Management, which helps customers to minimize their cost of energy consumption by appropriately controlling their loads. Thermostatically Controllable Appliances (TCAs) such as air conditioner and water heater are focused in this study, as they consume more than 50% of the total household energy consumption. The control process includes stochastic dynamic programming, which incorporated uncertainties in price and demand variation. It leads to an accurate selection of appliance settings. It is followed by a real time control of selected appliances with its optimal settings. Temperature set points of TCAs are adjusted based on price droop which is a reflection of actual cost of energy consumption. Customer satisfaction is maintained within limits using constraint optimization. It is showed that considerable energy savings is achieved.

The high price of drug patents: Australia, patent law, pharmaceutical drugs and the Trans-Pacific Partnership

This week, the secrecy surrounding an independent Australian report on patent law and pharmaceutical drugs has been lifted, and the work has been published to great acclaim...

Price and trade: World no tobacco day 2015

This special issue of Tobacco Control for World No Tobacco Day is focused on the theme of Price and Trade.

When the price is not right: Technology price gouging in Australia

Apple Inc. has often portrayed itself as the champion of consumers, with its advertising campaigns on “1984”, “Think Different”, and “Rip, Mix, Burn”. However, this reputation has been called into question after Apple refused to appear before the Parliament’s inquiry into IT Pricing in Australia and explain its pricing policies in Australia.

Modelling interregional links in electricity price spikes

Abnormally high price spikes in spot electricity markets represent a significant risk to market participants. As such, a literature has developed that focuses on forecasting the probability of such spike events, moving beyond simply forecasting the level of price. Many univariate time series models have been proposed to dealwith spikes within an individual market region. This paper is the first to develop a multivariate self-exciting point process model for dealing with price spikes across connected regions in the Australian National Electricity Market. The importance of the physical infrastructure connecting the regions on the transmission of spikes is examined. It is found that spikes are transmitted between the regions, and the size of spikes is influenced by the available transmission capacity. It is also found that improved risk estimates are obtained when inter-regional linkages are taken into account.

Estimating the parameters of stochastic volatility models using option price data

This article describes a maximum likelihood method for estimating the parameters of the standard square-root stochastic volatility model and a variant of the model that includes jumps in equity prices. The model is fitted to data on the S&P 500 Index and the prices of vanilla options written on the index, for the period 1990 to 2011. The method is able to estimate both the parameters of the physical measure (associated with the index) and the parameters of the risk-neutral measure (associated with the options), including the volatility and jump risk premia. The estimation is implemented using a particle filter whose efficacy is demonstrated under simulation. The computational load of this estimation method, which previously has been prohibitive, is managed by the effective use of parallel computing using graphics processing units (GPUs). The empirical results indicate that the parameters of the models are reliably estimated and consistent with values reported in previous work. In particular, both the volatility risk premium and the jump risk premium are found to be significant.

A note on Gittins indexes for pharmaceutical research

The Bernoulli/exponential target process is considered. Such processes have been found useful in modelling the search for active compounds in pharmaceutical research. An inequality is presented which improves a result of Gittins (1989), thus providing a better approximation to the Gittins indices which define the optimal search policy.

Influence of Measured Characteristics on Price Received for Merino Wool from the Traprock Area of Southern Queensland

In this study of a commercial wool clip sold in the years 1991/92-1996/97, the effect of wool characteristics, (staple length, staple strength, fibre diameter, position of break, vegetable matter, hauteur, yield and coefficient of variation of staple length) on price was explored together with their effect on the ratio of price received per lot to the average weekly price (1994/95 basis) for clean wool of the same fibre diameter. Fibre diameter and where the point of break occurred had the most effect on price. As hauteur, staple length and yield increased, so did the price ratio but it decreased as the percentage of vegetable matter and the coefficient of variation of the staple length increased. The ratio of proceeds if all wool had been sold at average weekly market price, to proceeds if all wool had been 21µm or less, indicated little financial advantage over the six-year period as most sale lots were under 22µm. To raise the proceeds of sale above the proceeds estimated using average market price for each lot, the analyses suggested that hauteur, staple length and its coefficient of variation, could be considered, in addition to fibre diameter, when sourcing wethers for purchase. Animal production for a consuming world : proceedings of 9th Congress of the Asian-Australasian Association of Animal Production Societies [AAAP] and 23rd Biennial Conference of the Australian Society of Animal Production [ASAP] and 17th Annual Symposium of the University of Sydney, Dairy Research Foundation, [DRF]. 2-7 July 2000, Sydney, Australia.