Relocation Is Not Enough: Employment Barriers Among HOPE VI Families

Examines whether the federal HOPE VI housing program has affected employment rates among residents, and identifies barriers to workforce participation. Based on surveys of residents at five Hope VI public housing sites

Simulating a Multiproduct Barter Exchange Economy

We describe a multiproduct barter trading experiment in which students exchange real goods in an open market based on their own personal preference. The experiment is designed for simulating a pure exchange market in order to demonstrate the role of money and its functions in real economies by showing the limitations and inefficiencies of the traditional barter economy. In addition, the simulation is very effective in highlighting some of the key features that an object that serves as money needs to possess in order to function as an efficient medium of exchange, unit of account, and store of value.Roles of Money, Functions of Money, Barter, Exchange Economy, Medium of Exchange, Store of Value, Unit of Account, Experiment, Efficient and Inefficient Medium of Exchange, Types of Money, Fiat Money, Commodity Money, Features of Money, Homogeneity, Divisibility, Durability, Storability, Portability, Scarcity, Efficiency versus Equity, Information Cost

The Three Capitals of Pricing – Human, Systems and Social Capital

In this paper we explore the possibility, heretofore unexplored in the marketing literature, that firms “invest funds” in their pricing processes. This builds on some of the recent economic work on the costs of price adjustment. To do this we undertook a two-year, cross- disciplinary, ethnographic study on the nature of investments made by senior managers to enhance the effectiveness of the pricing processes within their firms. We discovered at least three distinct types of investments that managers at these firms made to price more effectively, which we term as the three capitals of pricing - human capital, systems capital and social capital. Our evidence suggests that pricing is really about managing both prices and investments in the pricing capital used to set and adjust those prices. The existence of these three forms of pricing capital provides a new perspective on pricing strategy, suggesting that firms compete on prices simultaneously in three different ways within their organizations. First, they compete on whether to invest in pricing capital versus or other areas of capital investment, such as plant, equipment, etc. Second, they decide what form of pricing capital to invest in – human, systems or social. Third, they set and adjust prices constrained by the existing pricing capital they have in place at the time of their pricing actions. We discuss the implications of these three forms of pricing capital and these new perspectives on pricing for the marketing, economics and strategy literature.Cost of Price Adjustment, Menu Cost, Managerial and Customer Costs of Price Adjustment, Pricing Capital, Pricing Production Process (PPP), Price Rigidity, Sticky Prices, Rigid Prices, Microfoundations of the Costs of Price Adjustment, Allocative Efficiency, Price System, Endogenous Price Adjustment Cost, Pricing, Human Capital, Systems Capital, Social Capital, Resource Based View of the Firm, Ethnography

Shattering the Myth of Costless Price Changes: Emerging Perspectives on Dynamic Pricing

In this paper we argue that pricing is all about price changes, and that the costs of price changes are often simultaneously subtle and substantial. We discuss a framework to deal with the dynamics of changing prices. This framework incorporates customer interpretations of price changes, an awareness of the organizational costs of price changes, investments in future pricing processes, and an understanding of the role that supply chains play in price change strategy. The framework can be used at the tactical level to improve the specific price changes chosen and made, at the managerial level to decide whether or not to make a particular price change at all, and at the strategic level to determine what price adjustment processes should be invested in to improve pricing effectiveness in the future.Menu Cost, Myth, Costly Price Change, Cost of Price Adjustment, Dynamic Pricing, Customer Cost of Price Adjustment, Organizational Cost of Price Adjustment, Managerial Cost of Price Adjustment, Supply Chain, Investment in Pricing Processes, Price Change Tactic, Price Change Strategy, Pricing Tactics, Pricing Strategy, Pricing Effectiveness

Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets

We study the price adjustment practices and provide quantitative measurement of the managerial and customer costs of price adjustment using data from a large U.S. industrial manufacturer and its customers. We find that price adjustment costs are a much more complex construct than the existing industrial organization or the macroeconomics literature recognizes. In addition to physical costs ("menu costs"), we identify and measure three types of managerial costs—information gathering, decision-making and communication costs, and two types of customer costs—communication, and negotiation costs. We find that the managerial costs are more than six times, and customer costs are more than twenty times, the menu costs. In total, the price adjustment costs comprise 1.22 percent of the company’s revenue and 20.03 percent of the company’s net margin. We show that many components of the managerial and customer costs are convex, while the menu costs are not. We also document the link between price adjustment costs and price rigidity. Finally, we provide evidence of managers’ fear of "antagonizing" customers.Menu Cost, Cost of Price Adjustment, Managerial Cost, Customer Cost, Information Gathering Cost, Information Processing Cost, Decision Making Cost, Communication Cost, Thinking Cost, Negotiation Cost, Customer Antagonization Cost, Convex Cost of Price Adjustment, Sticky Prices, Price Rigidity

Beyond the Cost of Price Adjustment: Investments in Pricing Capital

The literature on costs of price adjustment has long argued that changing prices is a complex and costly process. In fact, some authors have suggested that we should think of firms’ price-setting activities as “producing” prices, similar to the way firms use production processes to produce goods and services. In this paper we explore one natural extension of this view, that besides observing costs of price adjustment, we should also expect to see firm-level investments in capital expenditures into these “pricing” production processes. We coin the term “pricing capital” for these investments, and suggest that they can improve the efficiency of the “pricing production” activities by both reducing the costs of adjusting prices, and improving the effectiveness of price adjustments in future periods. Using two types of data sources, we find compelling evidence of the existence as well as the importance of pricing capital in firms. The existence of firm-level “pricing capital” has the potential of fundamentally altering the way we think about pricing and price adjustment in many areas of economics. It suggests looking toward the “pricing capital” to decipher the likely degree and causes of price rigidity and its variation across price setters, markets, and industries. Moreover, “pricing capital” introduces a new, higher-level, pricing decision made by individual firms. Decisions to invest in pricing capital compete with traditional capital investment decisions that have long been studied in economics, such as capital investments in plant, equipment, and R&D. Furthermore, since pricing capital is a choice variable, it implies that costs of price adjustment often used in models of price rigidity are endogenous. As such, pricing capital offers new insights into the micro-foundations of the costs of price adjustment. The most provocative implication of the new theory of pricing, however, is that the allocative efficiency of the price system itself may be determined endogenously by individual price setters who choose whether and how much to invest in pricing capital.Cost of Price Adjustment, Menu Cost, Managerial and Customer Costs of Price Adjustment, Pricing Capital, Pricing Production Process (PPP), Price Rigidity, Sticky Prices, Rigid Prices, Microfoundations of the Costs of Price Adjustment, Allocative Efficiency, Price System, Endogenous Price Adjustment Cost

"Long-Term Trends in Profitability: The Recovery of World War II"

It has become accepted doctrine among economists that the rate of profit in the United States has declined since the mid-1960s. What is less a matter of agreement is whether this decline represents a stage in a long-term secular decline. In a recent article Dumenil, Glick, and Rangel (1987) reviewed the existing empirical evidence on this topic and found that independent of variation in the definition of the rate of profit. any series extending back to 1929 reveals a stable or increasing trend. Although two periods of serious decline exist (after World War I and in the late 1950s) they are connected by a "leap forward" during World War II In fact in any measure which does not subtract taxes from profit World War II coincides with a considerable restoration of the rate of profit. This is an important anomaly for Marxists who predict a long-term declining tendency yet it has never been addressed in the empirical literature on this topic. There is no doubt that a restoration of the rate of profit discovered in the 1940s questions the relevance of Marx s famous thesis of a falling tendency of the rate of profit in capitalist economics. Certainly when Marx discussed the tendency of the rate of profit he acknowledged the important role of counter tendencies. However one would not expect the counter tendencies which Marx discussed to have such a concentrated impact over such a short span of time. The purpose of the present study is to investigate more carefully this leap forward in profitability. In a first part we will fully explore the statistical characteristics of the leap forward. Specifically we will compare the leap forward with earlier and future fluctuations and trends in profitability (an effort will be made in spite of the deficiencies of the data, to cover a period of 120 years). We will further determine whether the leap forward is invariant to the choice of the definition of the rate of profit or whether it can be explained by a specific choice of statistical categories. A second part will consider whether the leap forward is the expression of changes in the relative price of fixed capital, or a variation in the workweek of capital. The final part will explore whether the leap occurred in specific industries or whether it was a general feature of the economy. In the conclusion we will discuss a number of further alternative explanations.

Price Flexibility in Channels of Distribution: Evidence from Scanner Data

In this study, we empirically examine the extent of price rigidity using a unique store-level time series data set - consisting of (i) actual retail transaction prices, (ii) actual wholesale transaction prices which represent both the retailers' costs and the prices received by manufacturers, and (iii) a measure of manufacturers' costs - for twelve goods in two widely used consumer product categories. We simultaneously examine the extent of price rigidity for each of the twelve products at both, final goods and intermediate goods levels. We study two notions of price rigidity employed in the existing literature: (i) the frequency of price changes, and (ii) the response of prices to exogenous cost changes. We find that retail prices exhibit remarkable flexibility in terms of both notions of price rigidity. i.e., they change frequently and they seem to respond quickly and fully to cost changes. Furthermore, we find that retail prices respond not just to their direct costs, but also to the upstream manufacturers' costs, which further reinforces the extent of the retail price flexibility. At the intermediate goods level of the market, in contrast, we find relatively more evidence of rigidity in the response of manufacturers prices to cost changes. This despite the fact that wholesale prices change frequently and therefore exhibit flexibility according to the first notion of price rigidity.Price Flexibility, Price Rigidity, Final Goods Market, Intermediate Goods Market, Stages of Processing, Structural VAR, Scanner Data, Transaction Price Data, Frequency of Price Changes, Price Response to Exogeneous Cost Changes, Retail Price, Wholesale Price, New Keynesian Macroeconomics, How Markets Clear, Time Series Analysis, Orange Juice, Orange Juice Frozen Concentrate, Futures Market