Robust Dynamic Pricing with Strategic Customers

We consider the canonical revenue management (RM) problem wherein a seller must sell an inventory of some product over a finite horizon via an anonymous, posted price mechanism. Unlike typical models in RM, we assume that customers are forward looking. In particular, customers arrive randomly over time and strategize about their times of purchases. The private valuations of these customers decay over time and the customers incur monitoring costs; both the rates of decay and these monitoring costs are private information. This setting has resisted the design of optimal dynamic mechanisms heretofore. Optimal pricing schemes-an almost necessary mechanism format for practical RM considerations-have been similarly elusive. The present paper proposes a mechanism we dub robust pricing. Robust pricing is guaranteed to achieve expected revenues that are at least within 29% of those under an optimal (not necessarily posted price) dynamic mechanism. We thus provide the first approximation algorithm for this problem. The robust pricing mechanism is practical, since it is an anonymous posted price mechanism and since the seller can compute the robust pricing policy for a problem without any knowledge of the distribution of customer discount factors and monitoring costs. The robust pricing mechanism also enjoys the simple interpretation of solving a dynamic pricing problem for myopic customers with the additional requirement of a novel “restricted sub-martingale constraint” on prices that discourages rapid discounting. We believe this interpretation is attractive to practitioners. Finally, numerical experiments suggest that the robust pricing mechanism is, for all intents, near optimal

Strategy and Profitability: Managing Profits in Inflation Economy

The inflation rate in Dubai, United Arab Emirates (UAE) rose to 5-year highs in 2014 and higher by 28% in the first half of 2015. This situation has challenged business managers to sustain business goals. Guided by Kaplan and Norton\u27s balanced scorecard framework. the purpose of this multiple case study was to explore strategies business managers use to maintain profitability with rising operating costs. Two organizations in Dubai, United Arab Emirates were purposefully sampled for this multiple case study. Data were collected through multiple semistructured interviews of a single senior manager from each organization, then triangulated with company e-mails and focus group interviews of 2 junior managers from each of the organizations. All data were analyzed using a 5-phased cycle of compiling, disassembling, reassembling, interpreting, and concluding to understand the emerging patterns. The themes revealed cost reduction initiatives and revenue enhancements initiatives as the key strategies used by the business managers. The approach and direction used in these strategies showed variance based on cost and revenue drivers of the organizations. The findings of the study can be a guide for business managers to understand the essence of effective business strategies that counter challenging economic environments, thus sustaining profitability and developing additional employment opportunities for the surrounding community

Revenue Management, Dynamic Pricing and Social Media in the Tourism Industry: A Case Study of the Name-Your-Own-Price Mechanism

The application of revenue management (RM) is changing more rapidly than ever before, driven as an important factor of the daily operation to keep prices competitive and to create real-time optimal pricing. In the age of the Internet and social media, negotiated fixed rates have become outmoded. Consumers now have access to online rate comparisons and real time reviews. They think more strategically when making purchasing decisions. Thus, they become more demanding. This research provides an empirical study of revenue management and pricing with an emphasis given to the hospitality industry. The aim of this research is to examine the gap between the theoretical approach and the empirical analysis, the rationality between the implementation of dynamic pricing approaches and the impact on the customer. Furthermore, the research examines the perception of consumers’ willingness to pay when using the Name-Your-Own-Price (NYOP) mechanism, which allows customers to have a greater influence on the amount they are prepared to pay. Instead of posting a price, the seller waits for a potential buyer’s offer, which he or she can either accept or reject. Finally, this study examines, whether the use of social media plays a decisive role in the online purchase environment used by the hospitality sector and the effect it has on a consumer’s willingness to pay. Accordingly, hotel revenue managers will be able to use the findings of this study to effectively plan their short-term, and long-term pricing strategies to generate a stronger revenue management performance for their property, namely to increase the RevPAR (revenue per available room). The research can be useful to businesses, as empirical data and tests were employed to determine what kind of impact the different pricing policies have on the long-term profit optimization. These practical and theoretical elements of the field reinforce each other‚ as well as to a large extent, the constructive interplay of theory and practice. The research is twofold, the holistic approach, which discusses the development of the theoretical dimension, is complemented by the practical analysis of the collected data of the surveys. This approach ensures the relevant observation of ‘real-time’ data and the evaluation of the set of hypotheses. The study conducted two large scale interrelated structured surveys. The first structural survey (NYOP) provides a better understanding of the final consumer, by using the name-your-own-price mechanism and by observing the extended role of social media in the booking procedure. Hypotheses were tested and in the second survey in-depth data from revenue managers and executives working across the tourism industry was collected, in an attempt to measure the use of pricing strategies within the industry. The research contributes to the theory by empirical testing how the extended RM objectives influence RM and pricing. It provides a clear picture of the necessary elements for a successful implementation of pricing strategies. Finally, the study has implications for the consumer. Thus, the researcher investigates consumer’s perception to the NYOP model and the expanding role of social media to the consumer-booking pattern

A Review of the Monitoring of Market Power The Possible Roles of TSOs in Monitoring for Market Power Issues in Congested Transmission Systems

The paper surveys the literature and publicly available information on market power monitoring in electricity wholesale markets. After briefly reviewing definitions, strategies and methods of mitigating market power we examine the various methods of detecting market power that have been employed by academics and market monitors/regulators. These techniques include structural and behavioural indices and analysis as well as various simulation approaches. The applications of these tools range from spot market mitigation and congestion management through to long-term market design assessment and merger decisions. Various market-power monitoring units already track market behaviour and produce indices. Our survey shows that these units collect a large amount of data from various market participants and we identify the crucial role of the transmission system operators with their access to dispatch and system information. Easily accessible and comprehensive data supports effective market power monitoring and facilitates market design evaluation. The discretion required for effective market monitoring is facilitated by institutional independence.Electricity, liberalisation, market power, regulation

THE USEFULNESS OF MANAGEMENT ACCOUNTING SYSTEMS, FUNCTIONAL DIFFERENTIATION AND MANAGERIAL EFFECTIVENESS

~tis study examines the role of broad scope information, made available by management accouming system* (MAS), in enchanging mamgerial performance. It is proposed that differentiation of activities into area such us marketing and production in an organizational response to manage uncertainty. The paper argues that such different of activities moderates the association between the extent to which managers use broad scope MAS information and peffornmnce. A study off 75 managers indicated that the association between the extent of use of broad scope MAS inf0rmmion and performance was strottger for managers of marketing than production activities

INTERRELATED BANK STRATEGIES, FINANCIAL FRAGILITY AND CREDIT EXPANSION: A POST KEYNESIAN APPROACH

This paper aims at clarifying the relationship between individual bank and banking industry behavior in credit expansion. We argue that the balance sheet structure of an individual bank is only partially determined by its management decision about how aggressively to expand credit; it is also determined by the balance sheet positions of other banks. This relationship is explicitly shown by a disaggregation of the variable that enters into the simple money multiplier. The approach developed here opens a way to integrating the micro and macro levels in a Keynesian banking-system analysis.