Is exit a firm failure? Facts and theory

2010 ◽  
Vol 60 (4) ◽  
pp. 405-426
Author(s):  
A. Marques ◽  
A. BrandÃo
Keyword(s):  
Empirical Evidence ◽  
Optimal Strategy ◽  
Time Horizon ◽  
Unit Cost ◽  
Market Price ◽  
Entry And Exit ◽  
Investment Cost ◽  
Production Output ◽  
Entrepreneurial Decision ◽  
Production Decision

Literature on firms’ entry and exit decisions provides empirical evidence that industries with many exits also have many entries. We present a paper that merges some different approaches to the entry and exit of firms and which proposes a new method for looking at the entrepreneurial decision. Our model theoretically supports what empirical evidence has shown and holds; that databases are not yet developed enough to understand the whole exit process. We demonstrate that the possibility of recovering some share of investment costs makes entry more than just a production decision. Within a defined time horizon, a firm can enter the market despite making a loss from production output since the firm’s return consists of both sales and investment cost recovery. Entry may be the optimal strategy even when the unit cost is higher than the market price.

scholarly journals The performance of secondary share recommendations published in the news media and the effects on the efficiency of the Johannesburg Stock Exchange

1990 ◽  
Vol 21 (4) ◽  
pp. 129-134
Author(s):  
Narendra Bhana
Keyword(s):  
Small Group ◽  
Empirical Evidence ◽  
News Media ◽  
Stock Exchange ◽  
Market Price ◽  
Share Price ◽  
Efficient Market ◽  
Johannesburg Stock Exchange ◽  
New Information ◽  
Subsequent Publication

The objective of this study is to determine if the buy and sell recommendations published in newspapers are able to outperform the market. The empirical evidence supports the hypothesis that buy and sell recommendations released to a small group of investors is not immediately and fully reflected in the share price. Instead, it appears that subsequent publication of these recommendations in newspapers has a significant impact on the market price. The findings of this investigation are not at variance with the notion of an efficient market. The publication of analysts' recommendations in newspapers makes the market more efficient by passing on new information to a large group of investors.

scholarly journals Continuously Increasing Price in an Inventory Cycle: An Optimal Strategy for E-Tailers

2008 ◽  
Vol 2008 ◽  
pp. 1-14
Author(s):  
Prafulla Joglekar ◽  
Patrick Lee ◽  
Alireza M. Farahani
Keyword(s):  
Sensitivity Analysis ◽  
Optimal Strategy ◽  
Demand Curve ◽  
Unit Cost ◽  
Price Strategy ◽  
Fixed Price ◽  
Fixed Quantity

Operations researchers have always assumed that when a product's unit cost is constant and its demand curve is known and stationary, a retailer of the product would find it optimal to replenish the inventory with a fixed quantity and to sell the product always at a fixed price. We present, with proof, a model that shows that, in such a case, an e-tailer is better off using a continuously increasing price strategy than using a fixed price strategy within each inventory cycle. Sensitivity analysis shows that this strategy is particularly profitable when demand is highly price sensitive and the inventory ordering and carrying costs are high.

scholarly journals Analisis Efisiensi Pemasaran Usaha Purse Seine di Kota Ambon

2015 ◽  
Vol 3 (1) ◽  
pp. 15
Author(s):  
Lilian Mathilda Soukotta
Keyword(s):  
Market Structure ◽  
Market Integration ◽  
Market Price ◽  
Price Transmission ◽  
Purse Seine ◽  
Market Behavior ◽  
Entry And Exit ◽  
Fresh Fish ◽  
Market Location ◽  
And Performance

The purpose of this research is to evaluate the efficiency of the marketing system regarding market structure, behavior and performance of the purse-seiner catch at Ambon city fish market.The data required for evaluation were collected from the owner of the purse seine and fish trader.The data then were analyzed by market integration and price transmission elasticity. In addition, analyses of the market structure and market behavior were utilized to describe the market performance that was significantly occurred in the fish market. Results show that (1) market integration occurred is imperfect integration or oligopsony; (2) market behavior is relatively varied, i.e., retailers tend to increase fish price if the market price is sharply increasing, but they are very slow in reducing the price if the fish price is decreasing; (3) for each market location, retailer is fewer than fish producer; no barriers for producer and retailer to entry and exit from the market; in general fresh fish marketed have high quality except for condition of the abundant catch where some fish are stored in the cool box for seiling at the next day.

scholarly journals A New Model for Pricing Collateralized OTC Derivatives

2019 ◽  
Author(s):  
Tim Xiao
Keyword(s):  
Credit Risk ◽  
Empirical Evidence ◽  
Market Price ◽  
New Model ◽  
Otc Derivatives ◽  
Risk Measurements ◽  
The Impact ◽  
Unique Dataset

This paper presents a new model for pricing OTC derivatives subject to collateralization. It allows for collateral posting adhering to bankruptcy laws. As such, the model can back out the market price of a collateralized contract. This framework is very useful for valuing outstanding derivatives. Using a unique dataset, we find empirical evidence that credit risk alone is not overly important in determining credit-related spreads. Only accounting for both collateral arrangement and credit risk can sufficiently explain unsecured credit costs. This finding suggests that failure to properly account for collateralization may result in significant mispricing of derivatives. We also empirically gauge the impact of collateral agreements on risk measurements. Our findings indicate that there are important interactions between market and credit risk. https://arabixiv.org/b9vg8/download

scholarly journals Bounded Rationality in Compulsive Consumption

2021 ◽  
Vol 9 (1) ◽  
pp. p30
Author(s):  
Ingo Fiedler
Keyword(s):  
Rational Choice ◽  
Bounded Rationality ◽  
Empirical Evidence ◽  
Time Horizon ◽  
Rational Choice Theory ◽  
Choice Theory ◽  
Extreme Case ◽  
Pathological Gamblers ◽  
Wide Range ◽  
Compulsive Consumption

The standard microeconomic assumption is that consumers’ choices maximize consumers’ utility. This theoretical article challenges this assumption by presenting a framework of an extreme case: compulsive consumption. Backed by a wide range of existing empirical evidence it is shown by the example of pathological gamblers that some consumers (1) have inconsistent preferences, (2) underestimate the time horizon and the frequency of consumption, and (3) underestimate the costs and overestimate the benefits of consumption. The results do not necessarily violate rational choice theory if interpreted as intra-personal externalities. By applying the perspective of picoeconomics, it is possible to reconcile fully rational but competing agents within an individual with inconsistent aggregate decisions. Yet, from a welfare perspective, the results imply that bounded rationality can be interpreted as a source of inefficiency and can thus constitute a rationale for regulatory intervention.

scholarly journals A New Model for Pricing Collateralized OTC Derivatives

2019 ◽  
Author(s):  
Tim Xiao
Keyword(s):  
Credit Risk ◽  
Empirical Evidence ◽  
Market Price ◽  
New Model ◽  
Otc Derivatives ◽  
Risk Measurements ◽  
The Impact ◽  
Unique Dataset

ABSTRACTThis paper presents a new model for pricing OTC derivatives subject to collateralization. It allows for collateral posting adhering to bankruptcy laws. As such, the model can back out the market price of a collateralized contract. This framework is very useful for valuing outstanding derivatives. Using a unique dataset, we find empirical evidence that credit risk alone is not overly important in determining credit-related spreads. Only accounting for both collateral arrangement and credit risk can sufficiently explain unsecured credit costs. This finding suggests that failure to properly account for collateralization may result in significant mispricing of derivatives. We also empirically gauge the impact of collateral agreements on risk measurements. Our findings indicate that there are important interactions between market and credit risk. https://frenxiv.org/am8zy/download

scholarly journals Examining Unit Costs for COVID-19 Case Management in Kenya

2020 ◽  
Author(s):  
Edwine Barasa ◽  
Angela Kairu ◽  
Wangari Nganga ◽  
Marybeth Maritim ◽  
Vincent Were ◽  
...  
Keyword(s):  
Case Management ◽  
Unit Cost ◽  
Market Price ◽  
Institutional Care ◽  
System Perspective ◽  
Unit Costs ◽  
Asymptomatic Patients ◽  
Home Based ◽  
Moderate Disease ◽  
Home Based Care

AbstractIntroductionCase management for COVID-19 patients is one of key interventions in country responses to the pandemic. Countries need information on the costs of case management to inform resource mobilization, planning and budgeting, purchasing arrangements, and assessments of the cost-effectiveness of interventions. We estimated unit costs for COVID-19 case management for patients with asymptomatic, mild to moderate, severe, and critical COVID-19 disease in Kenya.MethodsWe estimated per patient per day unit costs of COVID-19 case management for patients that are asymptomatic and those that have mild to moderate, severe, and critical symptoms. For asymptomatic and mild to moderate patients, we estimated unit costs for home-based care and institutional (hospitals and isolation centers). We used an ingredients approach, adopted a health system perspective and patient episode of care as our time horizon. We obtained data on inputs and their quantities from COVID-19 case management guidelines, home based care guidelines, and human resource guidelines, and augmented this with data provided by three public covid-19 treatment hospitals in Kenya. We obtained input prices for services from a recent costing survey of 20 hospitals in Kenya and for pharmaceuticals, non-pharmaceuticals, devices and equipment from market price databases for Kenya.ResultsPer day per patient unit cost for asymptomatic patients and patients with mild to moderate COVID-19 disease under home based care are KES 1,993.01 (USD 18.89) and 1995.17 (USD 18.991) respectively. When these patients are managed in an isolation center of hospital, the same unit costs for asymptomatic patients and patients with mild to moderate disease are 7,415.28 (USD 70.29) and 7,417.44 (USD 70.31) respectively. Per day unit costs for patients with severe COVID-19 disease managed in general hospital wards and those with critical COVID-19 disease admitted in intensive care units are 12,570.75 (USD 119.16) and 59,369.42 (USD 562.79).ConclusionCOVID-19 case management costs are substantial. Unit costs for asymptomatic and mild to moderate COVID-19 patients in home-based care is 4-fold lower compared institutional care of the same patients. Kenya will not only need to mobilize substantial resources to finance COVID-19 case management but also explore additional service delivery adaptations that will reduce unit costs.

scholarly journals A Model for Determining the Effect of Irregular Power Supply on Machining Foundry Products in a Developing Economy

2020 ◽  
Vol 5 (1) ◽  
Author(s):  
Adebayo F Owa ◽  
Fisayo Adesina ◽  
Funso O Kolawole ◽  
Oluwole D Adigun ◽  
Biliaminu Kareem
Keyword(s):  
Integer Programming ◽  
Cycle Time ◽  
Unit Cost ◽  
Optimal Number ◽  
Production Cycle ◽  
Negative Effect ◽  
Production Output ◽  
Demand Constraint ◽  
Production Industry

In this paper, profit is maximized (or production cost is minimized) by developing an Integer programming (IP) model to determine, at a given respective unit cost, optimal numbers of outputs obtainable per production cycle (time) using public electricity generated from national grids and alternate electricity from generators subject to production output capacity or demand constraint. The results obtained showed that production cycle time has a great impact on the determination of optimal outputs for the respective conditions. Also, increase in cost of public electricity per unit product has an upper limit beyond which it has negative effect on the profitability. The results served as determinant factors for production industry in establishing the level of outputs that sustained the profitability by providing optimal cost of public electricity to operate without having any effect on the profit, at a given cycle time. Keywords— Constraint, cycle time, integer programming, optimal number, model

scholarly journals On the Structure of a Swing Contract's Optimal Value and Optimal Strategy

2008 ◽  
Vol 45 (1) ◽  
pp. 1-15 ◽  
Author(s):  
Sheldon M. Ross ◽  
Zegang Zhu
Keyword(s):  
Optimal Strategy ◽  
Value Function ◽  
Market Price ◽  
Time Interval ◽  
Optimal Contract ◽  
Future Time ◽  
Special Cases ◽  
Optimal Value ◽  
Swing Contract ◽  
Time Point

Consider a sales contract, called a swing contract, between a seller and a buyer concerning some underlying commodity, with the contract specifying that during some future time interval the buyer will purchase an amount of the commodity between some specified minimum and maximum values. The purchase price and capacity at each time point is also prespecified in the contract. Assuming a random market price process and ignoring the possibility of storage, we look for the maximal expected net gain for the buyer of such a contract, and the strategy that achieves this maximal expected net gain. We study the effects that various contract constraints and market price processes have on the optimal strategy and on the contract value. We show how we can reduce the general swing contract to a multiple exercising of American (Bermudan) style options. Also, in important special cases, we give explicit expressions for the optimal contract value function and the optimal strategy.

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