Demand Estimation Using Managerial Responses to Automated Price Recommendations

We provide a new framework to identify demand elasticities in markets where managers rely on algorithmic recommendations for price setting and apply it to a data set containing bookings for a sample of midsized hotels in Europe. Using nonbinding algorithmic price recommendations and observed delay in price adjustments by decision makers, we demonstrate that a control-function approach, combined with state-of-the-art model-selection techniques, can be used to isolate exogenous price variation and identify demand elasticities across hotel room types and over time. We confirm these elasticity estimates with a difference-in-differences approach that leverages the same delays in price adjustments by decision makers. However, the difference-in-differences estimates are more noisy and only yield consistent estimates if data are pooled across hotels. We then apply our control-function approach to two classic questions in the dynamic pricing literature: the evolution of price elasticity of demand over and the effects of a transitory price change on future demand due to the presence of strategic buyers. Finally, we discuss how our empirical framework can be applied directly to other decision-making situations in which recommendation systems are used. This paper was accepted by Omar Besbes, revenue management and market analytics.

Demand, Supply, and Markup Fluctuations

Markup cyclicality has been central for debating policy effectiveness and understanding business-cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of firm-level markups and separating supply from demand shocks. We construct a novel dataset with detailed (multi-)product-level prices for individual firms. By estimating a structural model of supply and demand, we evaluate how companies adjust prices and marginal costs as a response to shocks. We find that price markups respond positively to supply shocks and negatively to demand shocks. The mechanism explaining the observed markup behaviour is the same for both shocks: incomplete pass-through of changes along the marginal-cost curve to price adjustments. These observed price and output responses are consistent with dynamic demand considerations. Finally, we use our estimated shocks to show how aggregate markup fluctuations in the sample period are mostly explained by aggregate demand shocks.

Do Petroleum Product Pump Prices Influence Economic Growth in Nigeria? An Empirical Analysis

This study examined the impact of fuel pump price adjustment and the causal relationship between fuel pump price adjustments and economic growth in Nigeria using secondary data extracted from the Central Bank of Nigeria annual report and National Bureau of Statistics publications spanning from 1980 - 2019. Descriptive statistics, unit root test, Johansen cointegration test, VECM and Granger causality test were employed to analyse the data. The result showed that a 1% increase in the prices of PMS and AGO increased economic growth by 0.014%, 0.038% and 0.018% respectively while AGO is reduced by 0.002%. Also the prices of PMS, AGO and DPK does not granger cause economic growth in Nigeria within the period under this study meaning that any macroeconomic policy that affects economic growth should be pursued independent of fuel pump prices as any policy aimed at influencing economic growth through pump price adjustments seems to be ineffective.

Rising prices are not a long-run UK economy risk

Significance There is little risk that inflation will return to heights seen in the 1980s as the authorities have the tools to control high inflation. However, their effective deployment depends on cooperation between the BoE and Her Majesty's Treasury (HM Treasury -- the finance ministry). Impacts The long-run demographic forces that kept real interest rates low in the past will continue to keep them low in the future. Low real rates and little risk of high inflation mean nominal rates will also remain low. Moderate inflation in the range 0-5% can be expected over the next decade. A dose of moderate inflation will be useful for the UK economy as it will ease the relative price adjustments needed during the recovery.

ALGORITHMIC IMAGINARIES IN THE MAKING: BRAZILIAN UBERTUBERS ENCOUNTERS WITH SURGE PRICING ALGORITHMS

This paper explores the algorithmic imaginaries associated with Uber's surge pricing, a central mediator of Uber drivers' labor experience. Surge pricing can be described as an algorithmically driven mechanism that uses price adjustments as financial incentives to redistribute the workforce on a territory. Inspired by Critical Algorithm Studies, we argue that this mechanism of governance is not passively incorporated by drivers and that their everyday encounters with surge pricing algorithms are productive of imaginaries and valid forms of knowledge that orient their practices. We approach this by mapping and analyzing how popular Brazilian Uber drivers on YouTube (the “UberTubers”, as we propose) discuss surge pricing in their channels. Based on 59 videos about surge pricing posted at the seven most popular Brazilian Ubertuber’s channels, we outline three main topics approached: (a) What is surge pricing and what does it do?; (b) Tactics to benefit from surge pricing; (c) Algorithmic Labor as a laboratory. Among our findings, we identified that some Ubertubers produce and share their own visual inscriptions to explain how surge pricing works. Through the engagement with their audience, Ubertubers collectivize their experiences and imaginations potentially transforming how various other drivers incorporate surge pricing into their own tactics and daily routines. These channels provide us with something similar to an “archive” of surge pricing’s many versions and facets and offer us the opportunity to learn how algorithms are perceived and how they shape labor on a micropolitical level.

Reflections on the ‘Just Price’ in Times of Crisis (with Reference to Coronavirus … but not only)

The debate about the ‘just price’ has ancient origin and returns forcefully to the scene when, in the event of crises of various kinds, there is a rapid and significant increase in prices of given goods or services. The main issue is whether price increases of such a nature could, or should, be considered illicit and ground the issue of sanctions against the firms increasing prices, thus focusing on a macro-systemic level of analysis. The central part of the article reviews different theories on what a ‘just price’ should be and focuses on the idea that a price is ‘just’ when it functions as an index of relative scarcity in free markets. It is claimed that such a function deserves protection by Italian and EU law. Therefore price adjustments in response to shocks cannot and should not be considered illegal: it is unacceptable to sanction private firms by attributing them the wrong of not having substituted themselves, at their own expense, for the exercise of a public function (that of making sure that price increases do not put at risk solidarity and other constitutional principles).

The Influence of Timber Types, Assortments, Qualities, Cuttings, Timber Tracts, Prices, Places, and Marketing Expenses on Timber Sales Volumes

The timber industry is one source of state revenue that plays an essential role in the forestry sector. However, this sector only grew by 3.66% in the Q4 of 2019, compared to the same period in 2018 by 4.25%. Timber sales also decreased by 5.6% due to several factors such as price adjustments, timber availability, and the quality level of the timber sold. This research aims to analyze the influence of the 4Ps of Marketing, namely products and their attributes in timber type, assortment, quality, cutting, timber tract, price, place, and marketing expenses on timber sales volume in July - December 2019. This research uses secondary data, which are processed using the multiple regression analysis methods. The results of this study indicate that the type of timber (X1), assortment (X2), quality (X3), cutting (X4), timber tract (X5), and price (X6) partially have a significant effect on timber sales volume (Y). Meanwhile, place (X7) and marketing expenses (X8) partially have no significant impact on the timber sales volume (Y). However, simultaneously all these variables have a significant effect on the timber sales volume (Y).

Who Benefitted From the PyeongChang Olympic Announcement? Evidence From the South Korean Stock Market

Understanding the market effects of Olympic host announcements is popular in academic research. Contrary to prior studies, announcing PyeongChang as the 2018 host had a positive effect on South Korea's Stock Market, with conservative estimates suggesting a peak of +3.8% during the 15 trading days post announcement (an increase equivalent to $34.962 billion). The degree to which firms benefitted varied by industry and lifecycle stage. Older and lower-growth financial and information technology firms saw larger abnormal returns compared to other firms. These findings suggest that academics and investors pay greater attention to idiosyncratic price adjustments to systematic market shocks.

GRAHAM’S THEORY OF INTERNATIONAL VALUES REVISITED: A RICARDIAN TRADE MODEL WITH LINK COMMODITIES

Frank D. Graham (1890–1949) presented an innovative multi-country, multi-commodity trade model that attached great importance to link commodities and quantity adjustments, not perfect specializations and price adjustments as emphasized by John Stuart Mill and Alfred Marshall. However, due to some shortcomings, this model was not sufficiently understood and has been forgotten. This study reconstructs Graham’s theory of international values by rectifying the shortcomings. Through this reconstruction, the following is clarified. First, in multi-country, multi-commodity trade models, the existence of link commodities is general and perfect specializations seldom appear; therefore, quantity adjustments are normally performed in the face of demand shifts. Second, notwithstanding unchanging sectoral productivity at a national level, national wage rates can vary greatly according to the patterns of the international division of labor. Third, while the domestic relative wage rate increases with an increase in a home country’s productivity of link commodities, it does not increase with an increase in the productivity of commodities produced only in the home country.

Price Adjustments in the Sudanese Construction Industry for Public-funded projects

In recent years Sudan suffers from deterioration in the economy. There are three financial legislations issued from the Government of Sudan between Nov 2016 and Oct 2018. These legislations have led to increase in prices of all goods and materials especially construction materials that lead many contracting companies to submit claims demanding for adjustment of prices. This paper documents effort by the Government of Sudan (GoS) to address price adjustments for public-funded projects affected by the mentioned legislations. It also validates some data submitted by the contractors to examine the adjustment through a technical committee established for that purpose. Furthermore, the GoS has introduced a program to build the capacity of all involved parties in the construction industry to calculate price adjustments. This paper compares some data submitted by some contractors for three projects in east Sudan (Qadarif), West Sudan (Zalingei) and central Sudan (Khartoum) that have been approved by consultants with prices of materials obtained from an independent third party the in Khartoum. The results of the comparison are found that some increase in material follows the prices of the (USD) dollar as reinforcement and some local material increase in price due to other reasons like fees of transportation. Also, when comparing prices in different states in Sudan, there are differences in some material depending on the distance from Khartoum and the availability of the materials in the states like local materials as aggregates and red bricks.