Theory and evidence on pricing by asymmetric oligopolies

We present an analysis of markets with many asymmetrically positioned retailers that compete for the business of both informed and uninformed customers for a homogenous good, such as software, music, book or a brand-name appliance. We show that two forms of asymmetry, one related to loyal segment sizes of retailers and one related to the positioning of firms, completely explain the observed price dispersion in such markets and the multitude of asymmetrical strategies adopted by retailers. The stochastic dominance of empirical mixed strategy measures is used to test the theory with data on 968 books from 10 online retailers

What's the 'big deal', and why is it bad deal for universities?

At first sight the “big (or all-you-can-eat) deal” seems excellent value for libraries and their users, and represents the shining possibilities of the electronic age. A more thorough-going evaluation, however, exposes dangers for universities, their funders and publishers. This paper examines the big deal in the light of fundamental market conditions and suggests alternative models for procuring electronic resources. The roles and strengths of the players in the information supply chain are defined and traditional hard-copy procurement is analysed in terms of these roles and the concepts of authority, branding and monopoly. The fundamentals of procuring electronic resources and prevalent purchasing models are discussed in terms of the same roles and concepts. The advantages of the big deal are laid out - access to resources, low unit costs etc. The dangers are also discussed. These arise mainly from the publishers’ position as monopolists. The possible long-term effects, on library budgets and academic publishing, of dealing with monopoly suppliers are examined. Means of avoiding or minimising these dangers – consortia, alternative publishing methods, new economic models to promote competition – are examined

A non-arbitrage liquidity model with observable parameters for derivatives

We develop a parameterised model for liquidity effects arising from the trading in an asset. Liquidity is defined via a combination of a trader's individual transaction cost and a price slippage impact, which is felt by all market participants. The chosen definition allows liquidity to be observable in a centralised order-book of an asset as is usually provided in most non-specialist exchanges. The discrete-time version of the model is based on the CRR binomial tree and in the appropriate continuous-time limits we derive various nonlinear partial differential equations. Both versions can be directly applied to the pricing and hedging of options; the nonlinear nature of liquidity leads to natural bid-ask spreads that are based on the liquidity of the market for the underlying and the existence of (super-)replication strategies. We test and calibrate our model set-up empirically with high-frequency data of German blue chips and discuss further extensions to the model, including stochastic liquidity

Evaluating Pricing Strategy Using e-Commerce Data: Evidence and Estimation Challenges

As Internet-based commerce becomes increasingly widespread, large data sets about the demand for and pricing of a wide variety of products become available. These present exciting new opportunities for empirical economic and business research, but also raise new statistical issues and challenges. In this article, we summarize research that aims to assess the optimality of price discrimination in the software industry using a large e-commerce panel data set gathered from Amazon.com. We describe the key parameters that relate to demand and cost that must be reliably estimated to accomplish this research successfully, and we outline our approach to estimating these parameters. This includes a method for ``reverse engineering'' actual demand levels from the sales ranks reported by Amazon, and approaches to estimating demand elasticity, variable costs and the optimality of pricing choices directly from publicly available e-commerce data. Our analysis raises many new challenges to the reliable statistical analysis of e-commerce data and we conclude with a brief summary of some salient ones.Comment: Published at http://dx.doi.org/10.1214/088342306000000187 in the Statistical Science (http://www.imstat.org/sts/) by the Institute of Mathematical Statistics (http://www.imstat.org

Economics of Copyright Collecting Societies and Digital Rights: Is There a Case for a Centralised Digital Copyright Exchange?

Copyright collecting societies have attracted economists’ attention for over 30 years and the attention of government regulators for even longer. They have typically been accepted by economists and by courts of law as necessary for reducing transaction costs and enabling copyright to work. The advent of digitization has led to renewed interest in the topic and to the view that though new technologies offer the possibility of improved rights management, collecting societies are not responding sufficiently to these opportunities. That view was evident in recent enquiries into the role of copyright in the digital age in the UK, which proposed the formation of a Digital Copyright Exchange (DCE) that would promote online digital trade. This paper evaluates the case for the DCE in the light of what economists know about collective rights management

Procuring electronic information: new business models in the context of the supply chain

Examines the information value chain and some of its concepts, first for printed information and second for electronic information. Discusses the procurement process and, in the light of the analysis made earlier in the paper, evaluates the various emerging models for procuring electronic information

Open Access Publishing: A Literature Review

Within the context of the Centre for Copyright and New Business Models in the Creative Economy (CREATe) research scope, this literature review investigates the current trends, advantages, disadvantages, problems and solutions, opportunities and barriers in Open Access Publishing (OAP), and in particular Open Access (OA) academic publishing. This study is intended to scope and evaluate current theory and practice concerning models for OAP and engage with intellectual, legal and economic perspectives on OAP. It is also aimed at mapping the field of academic publishing in the UK and abroad, drawing specifically upon the experiences of CREATe industry partners as well as other initiatives such as SSRN, open source software, and Creative Commons. As a final critical goal, this scoping study will identify any meaningful gaps in the relevant literature with a view to developing further research questions. The results of this scoping exercise will then be presented to relevant industry and academic partners at a workshop intended to assist in further developing the critical research questions pertinent to OAP

The information value chain: emerging models for procuring electronic publications

The first part of this paper examines the information supply chain and some of its concepts; particular attention is paid to features differentiating electronic from printed information. The second part discusses the procurement process and, in the light of the analysis made in the first part, evaluates the various models for procuring electronic information