The Experts below are selected from a list of 321 Experts worldwide ranked by ideXlab platform
Xiaobo Zheng - One of the best experts on this subject based on the ideXlab platform.
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Durable Goods Pricing in the Presence of Volatile Demand
2012 45th Hawaii International Conference on System Sciences, 2012Co-Authors: Xiaobo Zheng, Vera TilsonAbstract:Lead time and demand volatility affect manufacturer production and pricing decisions. A manufacturer must make production decisions based on economic forecasts of demand. After the production is complete and economic conditions are better understood, a monopolistic manufacturer can choose to dynamically adjust prices to react to the revealed demand. Durable Goods monopolists face an additional complication -- the cannibalization of sales via the second-hand market. Using a model of an infinite horizon game between a monopolistic Durable Goods manufacturer and heterogeneous consumers, we investigate how lead time and demand volatility affect the monopolist's production and pricing decisions, as well as his expected profit and consumer welfare.
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HICSS - Literature Survey: Mathematical Models in the Analysis of Durable Goods with Applications to IS Research
2011 44th Hawaii International Conference on System Sciences, 2011Co-Authors: Ravi Mantena, Vera Tilson, Xiaobo ZhengAbstract:Many physical and information Goods are not "consumed" during use e.g. airplanes and computer software. These 'Durable Goods' have been extensively studied over the last four decades in the economics, operations, information systems, and other literatures. Due to the heterogeneous nature of Durable Goods and their market contexts, the recommendations from the 'Durable Goods' literature cannot be adopted without careful consideration of the particular situation faced. Simple characterization of situations as involving 'Durable Goods' is certainly insufficient. Here we seek to create a simple framework for modeling Durable Goods, present a taxonomy of the models commonly used in the literature and the settings to which they correspond. Our objective is to present researchers with an integrated perspective of the research in this area and serve as a starting point for their own modeling efforts when analyzing markets involving Durable Goods. Applications to problems of interest to IS researchers are highlighted.
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Literature Survey: Mathematical Models in the Analysis of Durable Goods with Applications to IS Research
2011 44th Hawaii International Conference on System Sciences, 2011Co-Authors: Ravi Mantena, Vera Tilson, Xiaobo ZhengAbstract:Many physical and information Goods are not "consumed" during use e.g. airplanes and computer software. These 'Durable Goods' have been extensively studied over the last four decades in the economics, operations, information systems, and other literatures. Due to the heterogeneous nature of Durable Goods and their market contexts, the recommendations from the 'Durable Goods' literature cannot be adopted without careful consideration of the particular situation faced. Simple characterization of situations as involving 'Durable Goods' is certainly insufficient. Here we seek to create a simple framework for modeling Durable Goods, present a taxonomy of the models commonly used in the literature and the settings to which they correspond. Our objective is to present researchers with an integrated perspective of the research in this area and serve as a starting point for their own modeling efforts when analyzing markets involving Durable Goods. Applications to problems of interest to IS researchers are highlighted.
Miles S Kimball - One of the best experts on this subject based on the ideXlab platform.
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monetary policy and Durable Goods
2016 Meeting Papers, 2016Co-Authors: Christopher L. House, Robert B Barsky, Christoph E Boehm, Miles S KimballAbstract:We analyze monetary policy in a New Keynesian model with Durable and non-Durable Goods, each with a separate degree of price rigidity. Durability has profound implications for the business cycle properties of the model and its response to interest rate interventions. Since utility depends on the service flow from the stock of Durables, the flow demand for new Durables is inherently sensitive to temporary changes in the relevant real interest rate. For a sufficiently long-lived “ideal†Durable, we obtain an intriguing variant of the well-known “divine coincidence —in this case, the output gap depends only on inflation in the Durable Goods sector. We use numerical methods to verify the robustness of this analytical result for a broader class of model parameterizations. We then analyze the optimal Taylor rule for this economy. If the monetary authority places a high weight on stabilizing aggregate inflation then it is optimal to respond to sectoral inflation in direct proportion to the sectoral shares of economic activity. However, if the monetary authority wants to stabilize the aggregate output gap, it puts disproportionate weight on inflation in Durable Goods prices.
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sticky price models and Durable Goods
The American Economic Review, 2007Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:The inclusion of a Durable Goods sector in sticky-price models has strong and unexpected implications. Even if most prices are flexible, a small Durable Goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky. In contrast, flexibly priced Durables with sufficiently long service lives can undo the implications of standard sticky price models. In a limiting case, flexibly priced Durables cause monetary policy to have no effect on aggregate output. Our analysis suggests that Durable Goods prices are the most relevant data for calibrating price rigidity. (JEL E21, E23, E31, E52)
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sticky price models and Durable Goods
Social Science Research Network, 2005Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:This paper shows that there are striking implications that stem from including Durable Goods in otherwise conventional sticky price models. The behavior of these models depends heavily on whether Durable Goods are present and whether these Goods have sticky prices. If long-lived Durables have sticky prices, then even small Durables sectors can cause the model to behave as though most prices were sticky. Conversely, if Durable Goods prices are flexible then the model exhibits unwelcome behavior. Flexibly priced Durables contract during periods of economic expansion. The tendency towards negative comovement is very robust and can be so strong as to dominate the aggregate behavior of the model. In an instructive limiting case, money has no effects on aggregate output even though most prices in the model are sticky.
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do flexible Durable Goods prices undermine sticky price models
Social Science Research Network, 2003Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:The “neoclassical synthesis” sticky price model exhibits strange behavior when augmented with markets for Durable Goods with flexible prices. While in the data the output of Durable Goods responds strongly and positively to a loosening of monetary policy, in dynamic general equilibrium models a monetary expansion causes the output of flexibly priced Durables to contract. In an instructive special case in which the only sticky prices are those of nonDurables, the negative co-movement of Durable and nonDurable output exactly offsets and the behavior of aggregate output in the model is very similar to that of a model with fully flexible prices. This neutrality result is special, but the perverse response of Durables to monetary policy is highly robust. The reason for the co-movement problem is the combination of a naturally high intertemporal elasticity of substitution for the purchases of Durables and temporarily high factor prices associated with an economic expansion.
Vera Tilson - One of the best experts on this subject based on the ideXlab platform.
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Durable Goods Pricing in the Presence of Volatile Demand
2012 45th Hawaii International Conference on System Sciences, 2012Co-Authors: Xiaobo Zheng, Vera TilsonAbstract:Lead time and demand volatility affect manufacturer production and pricing decisions. A manufacturer must make production decisions based on economic forecasts of demand. After the production is complete and economic conditions are better understood, a monopolistic manufacturer can choose to dynamically adjust prices to react to the revealed demand. Durable Goods monopolists face an additional complication -- the cannibalization of sales via the second-hand market. Using a model of an infinite horizon game between a monopolistic Durable Goods manufacturer and heterogeneous consumers, we investigate how lead time and demand volatility affect the monopolist's production and pricing decisions, as well as his expected profit and consumer welfare.
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HICSS - Literature Survey: Mathematical Models in the Analysis of Durable Goods with Applications to IS Research
2011 44th Hawaii International Conference on System Sciences, 2011Co-Authors: Ravi Mantena, Vera Tilson, Xiaobo ZhengAbstract:Many physical and information Goods are not "consumed" during use e.g. airplanes and computer software. These 'Durable Goods' have been extensively studied over the last four decades in the economics, operations, information systems, and other literatures. Due to the heterogeneous nature of Durable Goods and their market contexts, the recommendations from the 'Durable Goods' literature cannot be adopted without careful consideration of the particular situation faced. Simple characterization of situations as involving 'Durable Goods' is certainly insufficient. Here we seek to create a simple framework for modeling Durable Goods, present a taxonomy of the models commonly used in the literature and the settings to which they correspond. Our objective is to present researchers with an integrated perspective of the research in this area and serve as a starting point for their own modeling efforts when analyzing markets involving Durable Goods. Applications to problems of interest to IS researchers are highlighted.
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Literature Survey: Mathematical Models in the Analysis of Durable Goods with Applications to IS Research
2011 44th Hawaii International Conference on System Sciences, 2011Co-Authors: Ravi Mantena, Vera Tilson, Xiaobo ZhengAbstract:Many physical and information Goods are not "consumed" during use e.g. airplanes and computer software. These 'Durable Goods' have been extensively studied over the last four decades in the economics, operations, information systems, and other literatures. Due to the heterogeneous nature of Durable Goods and their market contexts, the recommendations from the 'Durable Goods' literature cannot be adopted without careful consideration of the particular situation faced. Simple characterization of situations as involving 'Durable Goods' is certainly insufficient. Here we seek to create a simple framework for modeling Durable Goods, present a taxonomy of the models commonly used in the literature and the settings to which they correspond. Our objective is to present researchers with an integrated perspective of the research in this area and serve as a starting point for their own modeling efforts when analyzing markets involving Durable Goods. Applications to problems of interest to IS researchers are highlighted.
Robert B Barsky - One of the best experts on this subject based on the ideXlab platform.
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monetary policy and Durable Goods
2016 Meeting Papers, 2016Co-Authors: Christopher L. House, Robert B Barsky, Christoph E Boehm, Miles S KimballAbstract:We analyze monetary policy in a New Keynesian model with Durable and non-Durable Goods, each with a separate degree of price rigidity. Durability has profound implications for the business cycle properties of the model and its response to interest rate interventions. Since utility depends on the service flow from the stock of Durables, the flow demand for new Durables is inherently sensitive to temporary changes in the relevant real interest rate. For a sufficiently long-lived “ideal†Durable, we obtain an intriguing variant of the well-known “divine coincidence —in this case, the output gap depends only on inflation in the Durable Goods sector. We use numerical methods to verify the robustness of this analytical result for a broader class of model parameterizations. We then analyze the optimal Taylor rule for this economy. If the monetary authority places a high weight on stabilizing aggregate inflation then it is optimal to respond to sectoral inflation in direct proportion to the sectoral shares of economic activity. However, if the monetary authority wants to stabilize the aggregate output gap, it puts disproportionate weight on inflation in Durable Goods prices.
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sticky price models and Durable Goods
The American Economic Review, 2007Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:The inclusion of a Durable Goods sector in sticky-price models has strong and unexpected implications. Even if most prices are flexible, a small Durable Goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky. In contrast, flexibly priced Durables with sufficiently long service lives can undo the implications of standard sticky price models. In a limiting case, flexibly priced Durables cause monetary policy to have no effect on aggregate output. Our analysis suggests that Durable Goods prices are the most relevant data for calibrating price rigidity. (JEL E21, E23, E31, E52)
-
sticky price models and Durable Goods
Social Science Research Network, 2005Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:This paper shows that there are striking implications that stem from including Durable Goods in otherwise conventional sticky price models. The behavior of these models depends heavily on whether Durable Goods are present and whether these Goods have sticky prices. If long-lived Durables have sticky prices, then even small Durables sectors can cause the model to behave as though most prices were sticky. Conversely, if Durable Goods prices are flexible then the model exhibits unwelcome behavior. Flexibly priced Durables contract during periods of economic expansion. The tendency towards negative comovement is very robust and can be so strong as to dominate the aggregate behavior of the model. In an instructive limiting case, money has no effects on aggregate output even though most prices in the model are sticky.
-
do flexible Durable Goods prices undermine sticky price models
Social Science Research Network, 2003Co-Authors: Robert B Barsky, Christopher L. House, Miles S KimballAbstract:The “neoclassical synthesis” sticky price model exhibits strange behavior when augmented with markets for Durable Goods with flexible prices. While in the data the output of Durable Goods responds strongly and positively to a loosening of monetary policy, in dynamic general equilibrium models a monetary expansion causes the output of flexibly priced Durables to contract. In an instructive special case in which the only sticky prices are those of nonDurables, the negative co-movement of Durable and nonDurable output exactly offsets and the behavior of aggregate output in the model is very similar to that of a model with fully flexible prices. This neutrality result is special, but the perverse response of Durables to monetary policy is highly robust. The reason for the co-movement problem is the combination of a naturally high intertemporal elasticity of substitution for the purchases of Durables and temporarily high factor prices associated with an economic expansion.
Michael Waldman - One of the best experts on this subject based on the ideXlab platform.
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antitrust perspectives for Durable Goods markets
2004Co-Authors: Michael WaldmanAbstract:Markets for Durable Goods constitute an important part of the economy. In this paper I first briefly review the microeconomic theory literature on Durable-Goods markets, focusing mostly on the last ten years. I then discuss a number of my own recent analyses concerning optimal antitrust policy in Durable-Goods markets that mostly build on ideas in the larger literature. Specific topics covered include: (i) optimal antitrust policy for Durable-Goods mergers; (ii) practices that eliminate secondhand markets; (iii) tying in markets characterized by upgrades and switching costs; and (iv) antitrust policy for aftermarket monopolization in Durable-Goods markets.
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Durable Goods monopoly maintenance and time inconsistency
Journal of Economics and Management Strategy, 2004Co-Authors: Hodaka Morita, Michael WaldmanAbstract:Durable-Goods producers frequently choose to monopolize the maintenance markets for their own products. This paper shows that, similar to leasing, one reason a firm may employ this practice is that it reduces or even eliminates problems due to time inconsistency. We first demonstrate this result in a setting closely related to Bulow's (1982) classic analysis of Durable-Goods monopoly. We then show the result in a setting similar to those considered in Waldman (1996, 1997) and Hendel and Lizzeri (1999), in which new and used units are imperfect substitutes. The paper also discusses alternative explanations for the phenomenon. Copyright 2004 Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK..
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Durable Goods theory for real world markets
Journal of Economic Perspectives, 2003Co-Authors: Michael WaldmanAbstract:The early 1970s witnessed three major advances in Durable-Goods theory--Swan (1970, 1971) and Sieper and Swan (1973) on optimal durability, Coase (1972) on time inconsistency, and Akerlof (1970) on adverse selection. This paper surveys Durable Goods theory starting with these three contributions, where much of the focus is on recent literature and on models that explain real-world phenomena. In addition to the ideas found in the contributions of Swan, Coase, and Akerlof, topics covered include why producers sometimes practice "planned obsolescence," the role of adverse selection in new-car leasing, and reasons for aftermarket monopolization.
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Durable Goods pricing when quality matters
The Journal of Business, 1996Co-Authors: Michael WaldmanAbstract:This article considers a Durable Goods monopolist's choice of price and durability in a setting where durability choice controls the speed with which quality deteriorates. This article derives three main results: the price at which old units trade on the secondhand market limits what the firm can charge for new units; because of this linkage between the prices for new and old units, the firm chooses a durability level that is below the socially optimal level; and the incentive to reduce durability can be sufficiently severe that the monopolist eliminates the market for secondhand Goods. Copyright 1996 by University of Chicago Press.
