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.

Assessing the Impact of the Oil Price Shocks on Economic Growth in Oil-Exporting Arab Countries

The role of oil and gas in the modern economy is undeniable. That is why oil-exported countries have a good chance to wealth. But if the economy doesn't have diversification or there is no political stability this revenue cannot become welfare for the long run. As well as the changing of oil prices doe in the world market can impact the revenues of oil-exported countries. The purpose of the research – to assess the impact of the oil price shocks on economic growth in oil-exporting Arab countries. As a methodology, there were chosen VAR models and Granger causality tests. The practical importance of the research is to predict economic growth in other oil-exporting countries. The authors came to the conclusion that oil-price change has positive impacts on GDP growth in oil-rich Arab countries and there is the strong dependency from oil prices. The originality and scientific novelty of the research connected with this argue that oil revenues have impacts on economic growth only in economic and political stability.

Decisions and coordination of retailer-led fresh produce supply chains under two-period dynamic pricing and portfolio contracts

Fresh agricultural produce is almost the staple food and necessity of people's daily diet all over the world. However, natural perishability and freshness affect the demand for fresh agricultural produce. Due to the change of freshness, the retailer has to adopt a multi-period dynamic pricing strategy to deal with unsold products. The research object of this paper is the retailer's two-echelon supply chain of fresh agricultural produce, and the aim is to achieve the optimal two-period coordination and ordering through options and wholesale contracts in the supply chain. In the case of two-period pricing, we find that the optimal wholesale order quantity increases with the decline of the price in the first period and tends to be stable with the decline of the price in the second period. In contrast, the price change in the first period has a greater impact on the retailer's optimal order quantity. The profits of both the retailer and the supplier increase significantly with the increase of the price in the first period, while the impact of the change of the price in the second period is not obvious. Meanwhile, decentralized decision-making can only be coordinated in the supply chain through the original option contract at the first-period price. In the second period, the cost-sharing contract is introduced to coordinate the supply chain, increase orders, and increase the profits of both the retailer and the supplier. These findings are of great significance for both the retailer and the supplier in the multi-period dynamic pricing of fresh produce under the option contract.

Smoking-related behaviour changes among Korean men after the 2015 tobacco price increase: assessing the implications for the tobacco endgame using a reconstructed retrospective cohort study

ObjectivesTo examine the effect of Korea’s 2015 tax policy, discuss its effectiveness and limitations and present future directions for tax policy in the context of the tobacco endgame.DesignA retrospectively reconstructed cohort study.SettingKorea, August 2014–October 2015.ParticipantsThe study examined 41,605 male smokers aged 19 years and older who participated in the 2015 Korea Community Health Survey.Measures and analysisBinary and multinomial logistic regression was used to assess the impact of the tax policy on smoking-related behaviour. We adjusted for demographic and health-related variables.ResultsAmong 41,605 men who were smokers in 2014, 15,499 (35.85%, weighted) reported being affected by the price increase. Of all smokers, 1,772 (3.96%, weighted) reported quitting smoking because of the tobacco price increase. Others reduced their smoking amount (n=9,714, 22.48%, weighted) or made other changes such as switching brands (n=4,013, 9.41%, weighted). An additional 2,401 smokers (5.72%, weighted) quit smoking for reasons other than the tobacco price increase. Compared with those in the highest quintile of household income, the odds that those in the lowest quintile quit smoking due to the price increase were almost twice as high (OR=1.98, 95% CI 1.54 to 2.54).ConclusionsKorea’s 2015 tobacco price increase affected a significant number of smokers within a year, especially in the lowest income group, inducing some to quit or reduce their smoking amount. However, more smokers quit for reasons independent of the price change. Tax policy can effectively reduce smoking, but needs to be combined with other policies for optimal results.

Bubble Identification in the Emerging Economy Fuel Price Series: Evidence from a Generalized Sup Augmented Dickey–Fuller Test

In the recent past, the world in general and Pakistan in particular faced a drastic fuel price change, affecting the economic productivity of the country. This has drawn the attention of empirical researchers to analyze the abrupt change in fuel prices. This study takes a lead and investigates for the first time, in the literature related to Pakistan, the presence of multiple fuel price bubbles, with the purpose of knowing if the price driver is due to demand or it is exuberant consumer behavior that prevails and contributes to a sudden boom in fuel price series. The empirical analysis is performed through a recently proposed state-of-the-art generalized sup ADF (GSADF) approach on six commonly used fuel price series, namely, LDO (light diesel oil), HSD (high-speed diesel), petrol, natural gas, kerosene, and MS (motor spirit). The bubble analysis for each of the six fuel price series is based on monthly data from July 2005 to August 2020. The findings provide evidence of the existence of multiple bubbles in all series considered. Specifically, four bubbles are detected in each of the kerosene and natural gas price series, whereas three bubbles are noted in each of the HSD, LDO, petrol and MS price series. The maximum duration of occurrence of bubbles is of 12 months for kerosene. The date-stamping of the bubbles shows that the financial crisis of 2008 contributed to the emergence of bubbles that pushed oil prices upward and caused a depreciation in the national currency.

Stock And Flow Diagram of Supply-Prices Stabilization Model of The Chicken Meat Industry Supply Network: A Case Study In Daerah Istimewa Yogyakarta (DIY)

During the Covid-19 pandemic, the government issued a policy through Large-Scale Social Restrictions and the impact was felt on the unsustainable availability of various food commodities, one of which was broiler chicken meat. Broiler chicken is one of the animal protein food products that is favored by people from various circles because it has a relatively cheaper price compared to other meat commodities that provide animal protein, is easy to obtain, and has good organoleptic quality. The purchasing power of the people of the Special Region of Yogyakarta (DIY) is also increasing due to increased nutritional awareness related to the fulfillment of animal protein. The broiler production process contains uncertainty because it is seasonal. This causes a fluctuating price change. Fluctuations in broiler prices are not a new phenomenon in the DIY. Price fluctuations usually occur at certain times such as during religious holidays and this phenomenon occurs repeatedly every year. So we need a broiler supply chain research to maintain price stability using a dynamic simulation system model of the broiler chicken supply chain in DIY. This study develops a Causal Loop Diagram (CLD) and Stock and Flow Diagram (SFD) of system dynamic model of the broiler supply chain in the DIY and simulates the model using Powersim Studio 10 software. The simulation is confirmed verified and valid, therefore for the next research model can be used to solve the problem by generating policy scenario.

Relationships among the Fossil Fuel and Financial Markets during the COVID-19 Pandemic: Evidence from Bayesian DCC-MGARCH Models

This study examined how the relationships among the fossil fuel, clean energy stock, gold, and Bitcoin markets have changed since the COVID-19 pandemic took place for hedging the price change risks in the fossil fuel markets. We applied the Bayesian Dynamic Conditional Correlation-Multivariate GARCH (DCC-MGARCH) models using US daily data from 2 January 2019 to 26 February 2021. Our results suggest that the fossil fuel (WTI crude oil and natural gas) and financial markets (clean energy stock, gold, and Bitcoin) generally had negative relationships in 2019 before the pandemic prevailed, but they became positive for a while in mid-2020, alternating between positive (0.8) and negative values (−0.8). As it is known that negative relationships are required among assets to hedge the risk of price changes, this implies that stakeholders need to be cautious in hedging the risk across the fossil fuel and financial markets when a crisis like COVID-19 occurs. However, our study also revealed that such negative relationships only lasted for three to six months, suggesting that the effects of the pandemic were short term and that stakeholders in the fossil fuel markets could cross hedge with the financial markets in the long term.

Using Artificial Neural Networks to Support the Decision-Making Process of Buying Call Options Considering Risk Appetite

During the COVID-19 pandemic, uncertainty has increased in many areas of both business supply and demand, notably oil demand and pricing have become even more unpredictable than before. Thus, for companies that buy large quantities of oil, effective oil price risk management is crucial for business success. Nevertheless, businesses’ risk appetite, specifically willingness to accept more risk to achieve desired business benefits, varies significantly. The aim of this paper is to deepen the analysis of the effectiveness of employing artificial neural networks (ANNs) in hedging against oil price changes by searching for buy signals for European WTI (West Texas Intermediate) crude oil call options, while taking into account the level of risk appetite. The number of generated buy signals decreases with increasing risk appetite, and thus the amount of capital necessary to buy options decreases. However, the results show that fewer buy signals do not necessarily translate into lower returns generated by networks in a given class. Thus, higher levels of return on the purchase of call options may be obtained. The conducted analyses clearly proved that ANNs can be a useful tool in the process of managing WTI crude oil price change risk. Using the analyzed network parameters, up to 29.9% of the theoretical maximum possible profit from buying options every day was obtained in the test set. Furthermore, all proposed networks generated some profit for the test set. The values of all indicators used in the analyses confirm that the ANNs can be effective regardless of the level of risk appetite, so in this respect they may be described as a universal decision support tool.

Who Pays Attention to SEC Form 8-K?

The SEC requires public companies to disclose material information on Form 8-K within four days of a triggering event. We show that, on 8-K event and filing dates, there is significant abnormal attention on Bloomberg terminals, which are a source of information for institutional investors, while traditional media attention tends to be higher on filing days. Significant price discovery occurs on the event date and on the days between that day and the filing date. The traditional media coverage on the filing day appears to attract the attention of retail investors and leads to further price changes in the direction of the pre-filing day price change. Institutional investors exploit this price pressure via opportunistic liquidity provision. Overall, our evidence suggests that the Form 8-K filing may have little direct informational benefit, particularly to retail investors.

Impact of Right Share Issue on Share Price of Commercial Banks in Nepal

This study has examined the effect of issue of right share on share price movement in the banking sector using share price and price relative as the predictors of share price movement. Banking sub-index and index relative of different periods were used for analysis. Five different periods of time were selected to observe the share price movement considering the announcement date as the reference point of time. Based on the secondary sources of data, a correctional analysis was administered to examine whether the share price and price relative (banking index) has any relationship with the share price change in case of Nepalese commercial banks. Coefficient of determination and probable error were used to find how much percentage of the variation in the share price could be explained by the occurrence of right share issue and likewise, whether or not the relationship was significant. The results reveal that right share announcements have the signaling effect on share price movement. The share prices and banking indices of selected banks have decreased after the announcement of right share. The results suggest that the information irregularity behavior tempts a negative change in share price after the announcement of rights share. The implication of the results is that investors can forestall the nature of change in share price after rights issue announcement and develop strategic plans to expand the trading activity. Keywords: NCC Bank., Right announcement, Right share issue, Price relative, Index relative.