Price Setting Research Articles

Mekanisme Pasar untuk Mencapai Keseimbangan Pasar Dalam Sistem Ekonomi Islam

A country's economic activity is very dependent on the role of the market, even though injustice and fraud often occur in its trading activities, especially in determining the price offered. Therefore a rule is needed regarding market price determination, where the rule is known as a market mechanism, namely price setting based on demand and supply. The market is where the process of demand and supply occurs until the equilibrium price is reached. This research is a literature research or library reasearch that examines information through books, documents, articles, and other literature media that can be used as a source in preparing a study. This study aims to determine the role of market mechanisms to create market balance in the view of Islamic economics. The results showed that Islam puts the market in an important position in the economy of the market mechanism in accordance with sharia does not promote government intervention in normal market conditions. However, when the market is distorted, it takes the role of the government in overcoming problems to realize the benefits of the people

POWER SYSTEM UNDER FREE MARKET CONDITIONS

During the past 20 years, we have seen an expanding role for the free market in the electricity sector as well as other sectors. A perfectly competitive power market is efficient but difficult to achieve. The special features of electricity should be taken into account. In this paper, it is shown how traditional Optimal Power Flow (OPF) can be extended to include the demand side, thereby reflecting the supply-demand balance of an open market. The OPF technique can be used for the calculation of a set of nodal prices representing the optimal price at each node in the grid, from which we can derive a set of optimal transmission prices. Depending on the market design, generation planning can be performed by central optimization or in a decentralized manner by each generation company. For an individual generating company, the planning criterion will change from cost minimization to profit maximization. Practical experiences are now available from various parts of the world. It is clearly demonstrated that a power market can be operated under free market conditions. Various solutions concerning ownership and market design have been implemented. However, experiences have been mixed. In the future, it will be important to draw upon the lessons that have been learned.

Analysis of room rates setting in hotel daily operations

Hotels have a considerable influence in increasing regional tourism and the economy. The hotel itself means a service or service business operated and managed commercially and provided for everyone to receive services, such as rooms, accommodations, food and beverages, and other service facilities. In the tourism industry, especially in the hotel business, there is a term for room sales that has an important role as one of the elements of calculating income in hotels. The purpose of writing articles is to find out the problems that occur in setting room rates, the factors that affect setting room rates, the type of room rates, the purpose of setting room rates, and the method of determining the base price and sale price. The benefit of writing articles is to develop knowledge, especially about room rates and hospitality; to increase insight, knowledge, and experience in writing articles; to later be useful for education, especially for the hospitality industry. The method used in this writing is a qualitative method that produces information in the form of records or data, is descriptive, and tends to use analysis. Room pricing plays a major role in highly competitive businesses such as hotels because hotel room sales are the spearhead of a hotel business. Apart from the hotel having to maintain its profitability, the hotel also has to provide guests with balanced feedback according to the price paid by the guest. However, if the price setting of a hotel room is not driven by good planning and strategy, the business may fail.

The unfortunate dearth of judicial precedent in transfer pricing continues

Despite what could be hailed as the first two transfer pricing cases in South Africa, the unfortunate dearth of judicial precedent in South Africa regrettably continues. Transfer pricing is one of the most complex areas of tax alongside provisions dealing with controlled foreign companies, foreign exchange gains and losses, currency conversions, financial instruments, and corporate reorganisations. In fact, as the list goes on, it is just more apposite to say ‘tax is complex’, period. With regard to transfer pricing in particular, the complexity is amplified by the fact that transfer pricing is not even tax per se. It is an economic allocation of contribution through the value chain. It is through transfer pricing that each contributor in the value chain gets an adequate return for their contribution in the value chain. Once that allocation is complete, the tax provisions are applied to the returns of each contributor according to the tax laws of the countries in which they are taxable. A transfer price is a price set by a taxpayer when selling to, buying from or sharing resources with a related person. A transfer price is contrasted with a market price, which is the price set in the marketplace for the transfer of goods and services between unrelated persons where each party strives to get the utmost possible benefit from the transaction (see Arnold & McIntyre, International Tax Primer (Kluwer Law International 2002) 55; Danzinger, International Income Tax (Butterworths 1991) 303–307). Transfer prices are not negotiated in a free open market and as such have the propensity to deviate from prices agreed upon by non-related trading partners in comparable transactions under the same circumstances (Oguttu, International Tax Law: Offshore Tax Avoidance in South Africa (Juta 2015) 213). Unless prevented from doing so, related persons engaged in cross-border transactions can avoid the income taxes of a country through a manipulation of prices, mainly by shifting profits to low tax countries and expenses to high tax countries. To combat this, tax authorities across the globe have the power to adjust, in appropriate cases, the transfer prices set by related persons (Arnold & McIntyre, (Kluwer 2002) 55. In what can be welcomed as the first transfer pricing case in the South African courts, the South Johannesburg High Court had an opportunity to decide on the applicability of s 31(7) of the Income Tax Act 58 of 1962 (‘the Act’; any reference to a section or subsection are to the Act, unless otherwise stated, or the context indicates otherwise) to a debt owed by a foreign company to a South African company. The applicable provision excludes debt instruments that contain core characteristics of debt instruments from the application of transfer pricing provisions. In the second case, the same court missed out on an opportunity to gauge the legitimacy of the revenue collector to use s 31(2) of the Act to adjust prices charged between a taxpayer and third parties that are not related to the taxpayer.

Endogenous frequencies and large shocks: price setting in Greece during the crisis

Endogenous frequencies and large shocks: price setting in Greece during the crisis

Price Setting in Online Platform Markets: Evidence from Hong Kong

Price Setting in Online Platform Markets: Evidence from Hong Kong

Price Setting During the Coronavirus (COVID-19) Pandemic

Price Setting During the Coronavirus (COVID-19) Pandemic

Price Setting on the Two Sides of the Atlantic: Evidence from Supermarket-Scanner Data

Price Setting on the Two Sides of the Atlantic: Evidence from Supermarket-Scanner Data

Evaluating pricing strategies for premium delivery time windows

In the challenging environment of attended home deliveries, pricing delivery options can play a crucial role to ensure profitability and service quality of retailers. To differentiate between standard and premium delivery options, many retailers include time windows of various lengths and fees within their offer sets. Even though customers prefer short delivery time windows, longer time windows can help maintaining flexibility and profitability for the retailer. We classify pricing strategies along two dimensions: static versus dynamic price setting and whether an offer set can include one or multiple price points. For static pricing, we implement price configurations that reflect current business practice. For the dynamic pricing, we adapt routing mechanisms that consider the flexibility within the underlying route plan during the booking process and set delivery fees accordingly. To evaluate the pricing strategies under plausibly realistic conditions, we model customer behavior through a nested logit model. This model represents customer choice as sequential decisions between premium and standard time windows. We perform a computational study considering realistic travel and demand data to investigate the effectiveness of static and dynamic time window pricing. Finally, we offer managerial insights and an outlook into applying strategic analysis to decide on price setting strategies.

E-Commerce and Price Setting: Evidence from Europe

E-Commerce and Price Setting: Evidence from Europe

Price Setting With Strategic Complementarities as a Mean Field Game

We study the propagation of monetary shocks in a sticky‐price general equilibrium economy where the firms' pricing strategy features a complementarity with the decisions of other firms. In a dynamic equilibrium, the firm's price‐setting decisions depend on aggregates, which in turn depend on the firms' decisions. We cast this fixed‐point problem as a Mean Field Game and prove several analytic results. We establish existence and uniqueness of the equilibrium and characterize the impulse response function (IRF) of output following an aggregate shock. We prove that strategic complementarities make the IRF larger at each horizon. We establish that complementarities may give rise to an IRF with a hump‐shaped profile. As the complementarity becomes large enough, the IRF diverges, and at a critical point there is no equilibrium. Finally, we show that the amplification effect of the strategic interactions is similar across models: the Calvo model and the Golosov–Lucas model display a comparable amplification, in spite of the fact that the non‐neutrality in Calvo is much larger.

ОСНОВНІ КОНЦЕПЦІЇ ПОЛІТИКИ ЦІНОУТВОРЕННЯ В ГОТЕЛЬНО-РЕСТОРАННОМУ БІЗНЕСІ ТА ЇХ КЛАСИФІКАЦІЯ

The article examines the essence of the terms "price policy" and "concept of pricing policy". The relationship between the terms "pricing strategy", "concept of pricing policy" and "price policy" is shown. In the scientific literature, the term "pricing concept" is quite rare and is not fully researched. In some sources, pricing concepts are identified with pricing strategies, pricing policies, or pricing methods. In our opinion, the following definition of the term "concept of pricing" can be given, which, in turn, has several meanings: 1) it is a system of views on the essence of pricing processes; 2) fundamental ideas embedded in pricing theory, pricing methodology, pricing policy and pricing strategies; 3) a way of understanding pricing processes. We also offer the following definition of the concept of pricing policy – these are the basic ideas used in the pricing policy of the enterprise (company), regarding the main ways and methods of implementing the pricing strategy. The following classification criteria are proposed and relevant concepts of price policy in the hotel and restaurant business are highlighted: 1. In accordance with the transparency and comprehensibility of information about the cost of hotel and restaurant services (spontaneous market pricing policy; transparency of prices and conditions for providing hotel services; setting prices in the process of agreements with guests with the determination of the lower limit of the price of services). 2. In accordance with the planned level of profit from each visitor (maximizing the profits of hotels; availability of prices and services for as many visitors as possible). 3. Exclusivity of places and landscapes for recreation (exclusivity of hotel buildings and rooms; exclusivity of resorts and places around the hotel). 4. Stars of hotels. 5. Purpose of hotels 6. Seasonality 7. Innovativeness of service provision, etc. It was determined that the concepts of pricing policy are most often used in practice in combination with each other, in the form of combined concepts of pricing, which requires high qualification of management personnel in the hotel and restaurant business.

A real-time balancing market optimization with personalized prices: From bilevel to convex

This paper studies the static economic optimization problem of a system with a single aggregator and multiple prosumers in a Real-Time Balancing Market (RTBM). The aggregator, as the agent responsible for portfolio balancing, needs to minimize the cost for imbalance satisfaction in real-time by proposing a set of optimal personalized prices to the prosumers. On the other hand, the prosumers, as price taker and self-interested agents, want to maximize their profit by changing their supplies or demands and providing flexibility based on the proposed personalized prices. We model this problem as a bilevel optimization problem. We first show that the optimal solution of this bilevel optimization problem can be found by solving an equivalent convex problem. In contrast to the state-of-the-art Mixed-Integer Programming (MIP)-based approach to solve bilevel problems, this convex equivalent has very low computation time and is appropriate for real-time applications. Next, we compare the optimal solutions of the proposed personalized scheme and a uniform pricing scheme. We prove that, under the personalized pricing scheme, more prosumers contribute to the RTBM and the aggregator’s cost is less. Finally, we verify the analytical results of this work by means of numerical case studies and simulations.

Followers or Ignorants? Inflation Expectations and Price Setting Behavior of Firms

Followers or Ignorants? Inflation Expectations and Price Setting Behavior of Firms

Understanding Common Rationales Adopted in Healthcare Price Setting Across the Private Healthcare Sector in Sri Lanka: A qualitative study

Background / Objectives: The Sri Lankan healthcare system consists of public and private sectors. In terms of capacity, the public sector dominates the provision of care across curative, preventive and outpatient care. The private sector, too, has grown rapidly in recent years but was mainly confined to providing curative, diagnostic and outpatient care. Since, there are little or no studies conducted in Sri Lanka thus far, the objective of this study was to understand the current approaches adopted in determining the base of healthcare payments. This study also investigated the economic and administrative processes involved in determining the level of healthcare pricing in the private sector healthcare industry in Sri Lanka. Method: This qualitative study investigated the rationales adopted in healthcare pricing by healthcare administrators in the private sector. Structured interviews were conducted and thematic analysis were applied to interview data collected and analysis. Results: Five key themes, which influenced pricing, were identified from the interviews. These themes included influence from medical practitioners/clinicians, competitor pricing, price adjustment/profit margins, consumables and staff, and economic demands. There was a consensus that competitor pricing and seniority of the practicing clinicians had an impact on pricing. Conclusion: This study revealed that the base of payment in private sector healthcare is fee for service (FFS). Adopting popular international approaches such as Diagnostic Related Groups (DRGS) was not shown in this study. Further, it was evident that the Sri Lankan private healthcare sector administrators unilaterally fix pricing based on the identified key themes without adequately consulting the healthcare payers and users.

Food Expenditure Pattern of Household in Delta State, Nigeria: Economic Rationality Essentials

Parametric utility model that predicts preferences of heterogeneous food consumers is flawed with issues of economic rationality. Using axiomatic preference indexes on food data from 459 household selected from a three-stage sampling procedure, the aim of the study was to check whether a finite set of price and demand observations made on household consumers in Delta state is rationalizable by some form of utility maximization that is common across all households. The study found heterogeneity in food consumption behaviour with evidence against rationality in utility maximization for food expenditure choices at Afriat Efficiency Index (AEI) of unity, violating the GARP, SARP, SGARP, HARP and CM outside the optimum AEI of between 0.536 and 0.982 inclusive. In three of the four food choice categories, households had below the Varian AEI threshold of 0.95. Particularly, household expenditure behavior in the State violated the GARP axiom of revealed preference at 0.018, 0.07, 0.104, 0.05, and 0.081 severity of violations for food in general, protein, carbohydrate, fats and oil, and fruits and vegetables sub-food categories respectively with 5-45% of inconsistent household behaviour. At AEI of unity, 14.30%, 4.79%, 11.43% and 45.04% of the households failed the zero tolerance in the carbohydrate, protein, fats and oil, and fruits and vegetables categories respectively. Only about three to six revealed preferences were found necessary to fully rationalise observed food expenditure choices in the State. Thus, not only are households irrational in utility maximization, there is unstable preference in food demand. Therefore, there is, in the aggregate, no exact one continuous, strictly increasing, piecewise strictly concave, skew-symmetric, and/or homothetic preference function that would completely rationalize households food consumption behaviour in Delta state.

Allocation of Joint Costs and Price Setting for Electricity and Heat Generated in Cogeneration

In the case of cogeneration, the allocation of operation costs has a particularity specific to the joint production of heat and electricity from the same primary energy source. The cost allocation is also influenced by the demand conditions faced by the joint products, and prices must be sufficient for both products to remain profitable and competitive with other power generation alternatives in the respective markets. Therefore, the choice of cost allocation methodology is influenced by market conditions. The paper presents an algorithm for determining the prices of energy and heat produced in cogeneration according to demand and market conditions. The economic market method was extended with an algorithm based on duality theory for verifying allocation methods and establishing forecasting strategies. An example is provided for a cogeneration plant (1.287 MWe; 5.386 MWth) based on ORC (Organic Rankine Cycle) technology and biomass fuel. The fuel cost has a major influence on the total costs of the cogeneration plant, between 68% and 77% in the analyzed scenarios. The fuel cost variation is considered in the application of the cost allocation methods for setting the prices of heat and electricity.

Moving from linear to conic markets for electricity

We propose a new forward electricity market framework that admits heterogeneous market participants with second-order cone strategy sets, who accurately express the nonlinearities in their costs and constraints through conic bids, and a network operator facing conic operational constraints. In contrast to the prevalent linear-programming-based electricity markets, we highlight how the inclusion of second-order cone constraints improves uncertainty-, asset-, and network-awareness of the market, which is key to the successful transition towards an electricity system based on weather-dependent renewable energy sources. We analyze our general market-clearing proposal using conic duality theory to derive efficient spatially-differentiated prices for the multiple commodities, comprised of energy and flexibility services. Under the assumption of perfect competition, we prove the equivalence of the centrally-solved market-clearing optimization problem to a competitive spatial price equilibrium involving a set of rational and self-interested participants and a price setter. Finally, under common assumptions, we prove that moving towards conic markets does not incur the loss of desirable economic properties of markets, namely market efficiency, cost recovery, and revenue adequacy. Our numerical studies focus on the specific use case of uncertainty-aware market design and demonstrate that the proposed conic market brings advantages over existing alternatives within the linear programming market framework.

Analisis Pemasaran Melalui Harga dan Promosi Home Industry Tahu 99 Kennata Arjo Mukti di Kota Palangka Raya

Competition between companies is not only in terms of product types and product quality but from the company's strategy in setting prices and promotions and how to set prices and promotions used so as to increase consumer buying interest. Companies that are able to compete are companies that have a competitive advantage, where the company can carry out pricing and promotion strategies appropriately. Therefore, companies must act quickly and actively in marketing products and setting prices according to products, promotions that can attract consumers. Appropriate pricing and promotion strategies with the aim that consumers do not switch to competing products. The purpose of this study is to describe the pricing and promotion strategy of the Home Industry Tofu 99 Kennata Arjo Mukti in Palangka Raya City. This type of research is qualitative research. This study involved 10 (ten) informants. The data taken in this study is to make observations first, then conduct interviews, and document the data needed, then analyzed qualitatively including data reduction, presenting data, and drawing conclusions. The results showed that: Home Industry tofu 99 Kennata Arjo Mukti set prices based on market prices. The promotion used is by placing a banner in front of the production site, and promotion through word of mouth to another. Home Industry Tofu 99 Kennata Arjo Mukti sets the price according to the quality of the product, which is delicious, does not use preservatives, the ingredients used do not contain harmful ingredients such as formalin and borax. In promoting the information submitted in accordance with the condition of the product being sold. Home Industry Tofu 99 Kennata Arjo Mukti has two types of tofu pieces, namely medium-sized tofu and large-sized tofu with the same taste.

Dynamic pricing, reference price, and price-quality relationship

The price-quality relationship receives attention from both practitioners and scholars. Yet, the reference price effect, a central aspect in modeling consumer behavior, is absent from the debate. This article addresses the role of the reference price dynamics in understanding the price-quality relationship. We develop an optimal control model of the dynamic behavior of a firm setting price and quality investment over time, accounting for a reference price effect based on prior selling prices. We contribute to the literature on the price-quality relationship by highlighting the conditions under which better quality may drive a lower price when consumers are prone to a reference price. Analytical results show that a counterintuitive negative price-quality relationship may appear even with a linear demand function. Numerical results emphasize the importance of the initial market conditions in the negative price-quality relationship.