Profit Maximization Framework Research Articles

An Oversubscription and Service Pricing Exploitation-Based Profit Maximization Framework for Industry Cloud Resource Management

An Oversubscription and Service Pricing Exploitation-Based Profit Maximization Framework for Industry Cloud Resource Management

Modeling Job Creation to Aid the Attainment of SDGs: Firm Level Evidence from Nigeria

Employment is one of the most important social and economic issues in every country across the globe. Job creation however requires the combined effort of both government and private sector particularly considering that the private sector is recognized to have the leverage to provide jobs so long as a conducive investment environment is provided by the government. This study models the determinants of employment in the private sector to ascertain their ability to willingly contribute their quota towards the realization of SDGs 3, 8, and 10 through job creation and in the spirit of owners’ resources, firms’ specific characteristics, returns to owners, and tax and social cost burden. The study augmented the profit maximization framework of firms as contained in Jehle and Reny (2011) and applied a generalized least square technique on a panel data set of 13 banks quoted on the Nigerian Stock Exchange, over 17 years period. The study confirms that the level of employment is largely determined by resources available to firms, firm-specific characteristics as well as the level of profitability. The results also indicate that tax serves as a disincentive to job creation. Consequently, to encourage firms to create more jobs to aid the realization of SDGs in Nigeria, the study recommends amongst others, the establishment of the Private Sector Equity Development Fund (PSEDF), the entrenchment of a conducive environment to enhance the inflow of foreign direct investment, as well as tax incentives and other policies that enhance the long-term survival of firms in Nigeria.

An Examination of Excess Wood Pellet Supply in the United States

Abstract The US wood pellet exports—mostly to Europe, Japan, and South Korea—comprised 85 percent of its wood pellet production in the past 20+ years. In this article, we estimate the regional excess supply of wood pellets in the United States using annual data from 1996 to 2021.We use Seemingly Unrelated Regression (SUR) analysis in a profit maximization framework for the South, North, and West regions of the United States. We also include some clean energy policies of the European Union (EU) to examine their potential impact on US wood pellet export volume. Our results show that after application of the low-carbon energy target in the EU, the export volume of the United States has increased, especially in the South region. Elasticity of excess wood pellet supply from the United States was approximately 0.15 in all three regions, and interest rates and energy costs have negative impacts on regional excess supply. Therefore, the recent increase in interest rates and energy costs could slow down the growth of excess supply of wood pellets in the United States.

Land tenure security and farm efficiency in Indian agriculture: Revisiting an old debate

This paper examines the Marshallian inefficiency hypothesis of share tenancy system in agriculture of Odisha, Eastern India. It examines the hypothesis from a different perspective where it is argued that a secured land tenure system enhances farm efficiency even though it is sharecropping. We develop three hypotheses within the profit maximization framework and use the efficiency scores of paddy growers computed from the data envelop analysis (DEA) to verify them empirically. The ‘latent variable regression model’ results reveal that a secured land ownership status significantly augments farm efficiency. But the nature of tenancy contract (sharecropping and fixed-rent tenancy) makes no difference in farm efficiency. The policy implication of the study calls for tenancy reform in Odisha agriculture to make the tenancy a more secure one. Currently, the government of Odisha has banned the share tenancy. But a vast concealed tenancy comprising of marginal farmers and landless cultivators is in place. So any reform in this regard would benefit them directly.

Labor Market Size and Firms’ Social Security Contribution Rate in China

As an important component of operating costs, excessive social security contribution reduces the willingness and contribution rate of small- and medium-sized firms. In China, one third of firms do not participate in social security, and the other firms generally have the problem of evasion and arrears. Specifically, Feng (2013) finds that the contribution rate of Chinese industrial firms is uneven, and the average rate is only 10.82%, far lower than the legal rate. How to explain the variation in social security contribution rate among firms? Is social security contribution the burden of business activities? Answering these questions helps to understand the motivation of firms’ social security contribution, bolster up the design of social security collection system, and provide theoretical and practical reference for the “cost reduction” of supply-side structural reform.This paper investigates the relationship between labor market size (LMS) and firms’ social security contribution rate (SSCR) based on the profit maximization framework. Given the dual effects of SSCR on firms’ labor productivity and financial distress cost, optimal SSCR is achieved when marginal income equals to marginal cost. As LMS expands, decreasing search cost and compensating differentials for job loss risk increase optimal SSCR. Further, the empirical results measuring LMS by industrial employment capacity find that LMS significantly increases firms’ SSCR belonging to the same industry, especially for firms with serious financial constraints, high unemployment cost and private ownership. In addition, increasing SSCR significantly deteriorates firms’ performance, suggesting that the cost effect plays a leading role.Our findings demonstrate that the behaviors of social security by firms are subject to industrial environment, suggesting that it is necessary to account for the issue when policymakers adjust economic policies. Our paper contributes to the literature in three aspects: First, from the perspective of endogenous social security contribution, we explore the impact of labor market size on firms’ social security contribution, which enriches the labor “thick market” theory and relevant literature of firms’ social security contribution. Second, we build a theoretical framework to explain the endogenous logic of labor market size affecting firms’ social security contribution. Third, understanding the logic of firms’ social security contribution provides a micro basis for the reform of social security collection and contribution system.

Addressing endogeneity when estimating stochastic ray production frontiers: a Bayesian approach

We propose a Bayesian approach for inference in the stochastic ray production frontier (SRPF), which can model multiple-input–multiple-output production technologies even in case of zero output quantities, i.e., if some outputs are not produced by some of the firms. However, the econometric estimation of the SRPF—as the estimation of distance functions in general—is susceptible to endogeneity problems. To address these problems, we apply a profit-maximizing framework to derive a system of equations after incorporating technical inefficiency. As the latter enters non-trivially into the system of equations and as the Jacobian is highly complicated, we use Monte Carlo methods of inference. Using US banking data to illustrate our innovative approach, we also address the problems of missing prices and the dependence on the ordering of the outputs via model averaging.

Do crop price expectations matter? An analysis of groundwater pumping decisions in Western Kansas

The Ogallala Aquifer is the main water resource for irrigated agricultural production in much of Western Kansas. It is hypothesized that as crop price expectations increase, producers will apply more water to increase yields in order to maximize profit. Using field-level panel data on groundwater pumped for irrigation in Western Kansas, this paper examines whether irrigated producers’ groundwater pumping decisions are consistent with the profit maximization framework by empirically testing if crop price expectations have a positive impact on the quantity of groundwater pumped. In general, the empirical results indicate that crop price expectations have no statistically significant impact on the quantity of groundwater pumped per acre. This suggests that groundwater pumping decisions are not consistent with the profit maximization framework and that irrigated producers consider groundwater as a fixed input possibly due to limited availability of groundwater in the area. Our econometric analysis also suggests that only a small portion of rainfall is effective.

Organizational and Geographic Nursing Home Characteristics Associated With Increasing Prevalence of Resident Obesity in the United States.

Nursing home resident obesity increases the complexity of nursing care, and nursing homes report avoiding residents with obesity when choosing which prospective residents to accept. The objective of this study was to examine the associations between nursing home obesity prevalence rate and nursing home organizational, staffing, resident, and geographic factors within a profit maximization framework. The study cohort included U.S. Centers for Medicare and Medicaid Services data from U.S. nursing homes in 2013. Study findings supported hypothesized associations between obesity prevalence rate and higher occupancy, higher bed capacity, and multi-facility affiliation, but findings did not support a relationship between obesity prevalence rate and for-profit status.

Profit Maximization for Sponsored Data in Wireless Video Transmission Systems

Recently, sponsored data started to gain wide-spread use in wireless networks. Existing approaches for regular data services when applying to video transmission in sponsored data faces tremendous challenges. In two-sided markets, internal and external competitions among service providers (SPs), content provider (CPs), and end-users (EUs) become more complex, because larger video-bandwidth significantly increases the cost. When the three parties benefit from sponsored data, pricing and transmission design become much more complicated and difficult in parameterized systems by profit decomposing models, because maximizing the total profits among the three parties is a NP-hard problem. In this paper, we address the problem of maximizing the total profits for sponsored video data. We propose a submodular-based optimization framework for wireless video transmission systems. First, we formulate the sponsored data models in wireless video transmission respective to SP, CPs and EUs sides. The proposed profit models are used in wireless broadcasting networks with a specific attention to sponsored video data. Second, we construct a layered video transmission model in two-sided market through incorporating submodularity. We approximate the NP-hard layered-video broadcasting problem by applying submodular theory. Third, we present a profit maximization framework that optimizes the number of sponsored users, pricing and bandwidth provision. The profit of SP is maximized as well as the profit of CPs is improved and the cost-effective QoE of EUs is guaranteed. To verify the efficiency, we perform the experiments for different pricing schemes. The simulation results demonstrate that the proposed method significantly outperforms existing approaches because the proposed method can achieve maximum profits of both SP and CPs in a wide range of transmission rates.

Reform and efficiency of state-owned forest enterprises in Northeast China as “social firms”

State-owned forest enterprises (SOFEs) in northeast China have experienced past economic loss and environmental degradation, causing government to seek reforms. Measurement of technical efficiency allows us to evaluate overall trends and how reforms affect production of social and environmental goods. Previous assessments have used small samples, short time periods, and viewed SOFEs as if they were profit-maximizers. We compared a traditional profit-maximization framework to an alternative “social firms” framework for SOFEs to classify inputs and outputs, and data envelopment analysis to measure the efficiency of 86 SOFEs from 2003 to 2009. We argue that the social firm framework is more appropriate for SOFEs given their stated objectives. We found no overall trend in pure technical efficiency over time for the social firm framework; however, there was an increase in pure technical efficiency for the profit maximization framework, consistent with past literature. At the same time, there were decreases in scale efficiency primarily due to higher levels of government investment. We compared groups of SOFEs that underwent a specific pilot forest tenure reform to those that did not, and we found no evidence to support that tenure reform improved technical efficiency.

Profit maximization with customer satisfaction control for electric vehicle charging in smart grids

As the market of electric vehicles is gaining popularity, large-scale commercialized or privately-operated charging stations are expected to play a key role as a technology enabler. In this paper, we study the problem of charging electric vehicles at stations with limited charging machines and power resources. The purpose of this study is to develop a novel profit maximization framework for station operation in both offline and online charging scenarios, under certain customer satisfaction constraints. The main goal is to maximize the profit obtained by the station owner and provide a satisfactory charging service to the customers. The framework includes not only the vehicle scheduling and charging power control, but also the managing of user satisfaction factors, which are defined as the percentages of finished charging targets. The profit maximization problem is proved to be NPcomplete in both scenarios (NP refers to “nondeterministic polynomial time”), for which two-stage charging strategies are proposed to obtain efficient suboptimal solutions. Competitive analysis is also provided to analyze the performance of the proposed online two-stage charging algorithm against the offline counterpart under non-congested and congested charging scenarios. Finally, the simulation results show that the proposed two-stage charging strategies achieve performance close to that with exhaustive search. Also, the proposed algorithms provide remarkable performance gains compared to the other conventional charging strategies with respect to not only the unified profit, but also other practical interests, such as the computational time, the user satisfaction factor, the power consumption, and the competitive ratio.

Fairness constraints on profit-seeking: evidence from the German club concert industry

Unlike Kahneman et al. (Am Econ Rev 76(4):728–741, 1986) iconic snow shovel, live music is a performance good that fans attach a particular value to. Hence, an artist’s pricing decision might differ from standard rent-seeking behavior. In this paper, I propose a model that incorporates fairness concerns into the pricing decision for concert tickets. The hypotheses derived from this model are tested on data from the German club concert industry. The results are consistent with the model: Although (1) price dispersion is the dominant pricing strategy in the club concert industry and artists prefer to perform on a Friday or Saturday night, (2) artists do not set higher prices on the weekend. These results are consistent with fairness constraints, but are difficult to explain within a standard profit maximization framework. As a third result, (3) the data reveal that ticket prices are positively correlated with a city’s number of inhabitants .

A note on inventory policies for products with residual-life-dependent demand

We study inventory ordering policies for products that attract demand at a decreasing rate as they approach the end of their usable lifetime, for example, perishable items nearing expiration. We consider the “product freshness’’, or equivalently, the time until expiration (“residual life”) as a factor influencing the customer demand. In a profit-maximizing framework, we build on the Economic Order Quantity (EOQ) replenishment model and formulate the inventory ordering problem using a deterministic demand function that is concave decreasing in the the age of the product. We provide analytical results on the optimal ordering policy, including an explicit characterization of the decisions in the linear-demand case, and we develop an easy-to-implement adaptive heuristic policy for the general case. Numerical examples show that the optimal policy generates significant profit gains compared to the traditional cost-based policies and the adaptive heuristic policy performs highly satisfactorily in the tested instances.

Political standards: corporate interest, ideology, and leadership in the shaping of accounting rules for the market economy

Prudent, verifiable, and timely corporate accounting is a bedrock of our modern capitalist system. In recent years, however, the rules that govern corporate accounting have been subtly changed in ways that compromise these core principles, to the detriment of the economy at large. These changes have been driven by the private agendas of certain corporate special interests, aided selectively-and sometimes unwittingly-by arguments from business academia With Political Standards, Karthik Ramanna develops the notion of political markets to describe a key problem facing technical rulemaking in corporate accounting and beyond. When standard-setting boards attempt to regulate the accounting practices of corporations, they must draw on a small pool of qualified experts-but those experts almost always have strong commercial interests in the outcome. Meanwhile, standard-setting rarely enjoys much attention from the general public. This absence of accountability, Ramanna argues, allows corporate managers to game the system. In the profit-maximization framework of modern capitalism, the only practicable solution is to reframe managerial norms when participating in thin political markets. Political Standards will be an essential resource for understanding how the rules of the game are set, whom they inevitably favor, and how the process can be changed for a better capitalism.

Adoption of genetically-modified seeds in Taiwan

Purpose– The purpose of this paper is to present an integrated analysis of determining factors of farmers’ genetically modified (GM) technology adoption behavior, with a special emphasis on information acquisition, knowledge accumulation, product attributes and technology traits.Design/methodology/approach– Extending the expected profit maximization framework into a random utility model which accommodates joint decisions of information acquisition and technology adoption, the authors use the full information maximum likelihood method to yield both consistent and efficient estimates. The model is applied to a field survey collecting a sample of 141 randomly selected bananas farmers.Findings– The empirical results indicate information acquired through social network will increase the probability of adoption. Knowledge accumulation as depicted by education and farming experience is found to play a role in farmers’ technology adoption, whereas disease-resistant technology trait and flavor-enriching product attribute of GM bananas also appear to be important determinants for GM seeds adoption in Taiwan.Practical implications– Empirical evidence supports significance of technology traits and product attributes in farmer's GM technology adoption, suggesting the close collaboration between industry, government and academia is the key to successful commercialization of GM crops.Social implications– Understanding the determinants of farmers’ GM technology adoption can serve as the basis for promoting new biotechnology, and thus can facilitate the establishment of tenable solutions to food security issues.Originality/value– This paper is the first attempt to incorporate information acquisition into the behavioral analysis of GM technology adoption. The present study also extends previous literature by considering influential factors related to both consumers’ and producers’ preferences in modeling technology adoption.

Do Efficient Dairy Producers Purchase Quota

We examine the effect of farm level cost and scale efficiencies on dairy quota exchanges in Ontario. A constrained profit maximization framework is used to illustrate the role of cost efficiency in quota exchanges (i.e., sales and purchases). Using a multinomial logit model, where net quota buyers and net quota sellers are identified our empirical results indicate that variations in cost efficiency do not have a significant effect on purchases milk production quota, whereas scale efficiency does. Younger farmers, farms with underutilized barns space and farms with a recent history of quota purchase tend to buy milk production quota.

Tax Differentials and Agglomeration Economies in Intraregional Firm Location

This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework while accounting for the presence of different types of agglomeration economies (localization/ urbanization/ Jacobs’ economies) at the municipal level. We look at the location decision of more than 10,000 establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is necessary to restrict the choice set to the local labor market and, above all, to control for agglomeration economies so as to identify the effects of taxes on the location of new establishments.

Estimating Regional Softwood Lumber Supply in the United States Using Seemingly Unrelated Regression

In this article, we present estimates of regional softwood lumber supply functions in the United States using annual time series data for 1959 to 2009. Seemingly unrelated regression is used in a profit maximization framework to model softwood lumber supply as a function of lumber and stumpage prices, lagged supply, wage rate, and interest rate for the eastern and western United States. The effects of listing the northern spotted owl (Strix occidentalis caurina) as a threatened species and the US–Canada softwood lumber trade dispute are controlled for in empirical estimation. Results show that regional lumber supply is quite inelastic to lumber price and that stumpage price and bank prime rate negatively influence regional lumber supply. Results also suggest that present market supplies of softwood lumber have potential expansionary influence on future supplies, that listing of the northern spotted owl in 1990 reduced the lumber supply in the western region during subsequent years, that the US–Canada softwood lumber trade dispute/agreements favored regional lumber production in the United States during the period from 1996 to 2005, and that supply has declined during the recent period of economic recession.

The scope of agglomeration economies: Evidence from Catalonia

AbstractThis paper is an empirical study of the geographic and industrial scope of agglomeration economies. We also explore if small establishments make better neighbours than their larger counterparts. We address these issues by studying the effects of local industrial characteristics on the location decisions of new establishments using the random profit maximization framework. We carry out separate econometric estimations for seven industries in Catalonia, a Spanish region, using data from 1995–2002. Agglomeration economies seem to work at a very local level. Evidence of localization, urbanization and diversity effects is found. There is no strong evidence that establishments prefer to be located near to small rather than large establishments.ResumenEste artículo es un estudio empírico del alcance geográfico e industrial de las economías de aglomeración. Exploramos también si los establecimientos más pequeños constituyen mejores vecinos que sus contrapartes de mayor tamaño. Tratamos estos asuntos estudiando los efectos de las características de la industria local en las decisiones de localización de nuevos establecimientos utilizando el marco de maximización aleatoria de beneficios. Realizamos estimaciones econométricas por separado para siete industrias en Cataluña, una región española, utilizando datos de 1995–2002. Las economías de aglomeración parecen funcionar a escala muy local. Se encontraron pruebas de localización, urbanización y efectos de diversidad. No hay pruebas firmes de que los establecimientos prefieren ubicarse cerca de establecimientos pequeños, en vez de grandes.

Tax Differentials in Intraregional Firm Location: Evidence from New Manufacturing Establishments in Spanish Municipalities

Jofre-Monseny J. and Solé-Ollé A. Tax differentials in intraregional firm location: evidence from new manufacturing establishments in Spanish municipalities, Regional Studies. This paper analyses empirically how differences in local taxes affect the intraregional location of new manufacturing plants. These effects are examined within the random profit maximization framework. It looks at the location decision of more than 10 000 manufacturing establishments locating between 1996 and 2003 across more than 400 municipalities in Catalonia, a Spanish region. It is found that local taxes on business and property deter new manufacturing establishments. It is necessary to restrict the choice set to the local labour market and, above all, to control for agglomeration economies to identify the effects of taxes on the location of new establishments. Jofre-Monseny J. et Solé-Ollé A. Les écarts dans les taux d'imposition et la localisation intra-régionale des entreprises: des preuves provenant des nouveaux établissements industriels situés dans les municipalités espagnoles, Regional Studies. Cet article cherche à analyser de façon empirique comment les écarts entre les taux d'imposition locaux influent sur la localisation intra-régionale des nouveaux établissements industriels. On examine ces effets au sein d'un cadre au hasard de la maximisation des bénéfices. On étudie le choix de localisation de plus de 10.000 établissements industriels entre 1996 et 2003 à travers plus de 400 municipalités en Catalogne, une région espagnole. Il s'avère que les impôts locaux sur le commerce et la propriété dissuadent les nouveaux établissements industriels. Il est nécessaire de limiter l'ensemble des choix au marché du travail local et, surtout, de tenir compte des économies d'agglomération afin d'identifier les effets des impôts sur la localisation des nouveaux établissements. Impôts locaux Localisation des entreprises Economies d'agglomération Régression de Poisson Jofre-Monseny J. und Solé-Ollé A. Steuerdifferentiale bei den Standorten intraregionaler Firmen: Belege aus neuen Produktionsbetrieben in spanischen Gemeinden, Regional Studies. In diesem Beitrag wird empirisch analysiert, wie sich Unterschiede bei lokalen Steuern auf den intraregionalen Standort neuer Produktionsbetriebe auswirken. Diese Auswirkungen werden im Rahmen der zufälligen Gewinnmaximierung untersucht. Wir untersuchen die Standortentscheidungen von mehr als 10.000 Produktionsbetrieben, die sich im Zeitraum von 1996 bis 2003 in mehr als 400 Gemeinden der spanischen Region Katalonien angesiedelt haben. Wir stellen fest, dass lokale Steuern auf Unternehmen und Eigentum neue Produktionsbetriebe abschrecken. Es ist notwendig, die Auswahl für den lokalen Arbeitsmarkt einzuengen; insbesondere jedoch muss auf Agglomerationswirtschaften kontrolliert werden, um die Auswirkungen der Steuern auf den Standort neuer Unternehmen zu identifizieren. Lokale Steuern Firmenstandort Agglomerationswirtschaften Poisson-Regression Jofre-Monseny J. y Solé-Ollé A. Diferencias impositivas en la ubicación de empresas intrarregionales: ejemplo de nuevos establecimientos de fabricación en municipios españoles, Regional Studies. En este artículo analizamos empíricamente de qué modo las diferencias en los impuestos locales influyen en la ubicación intrarregional de nuevas plantas de fabricación. Examinamos estos efectos en un marco aleatorio de maximización de beneficios. Estudiamos las decisiones de ubicación de más de 10.000 establecimientos de fabricación entre 1996 y 2003 en más de 400 municipios en Cataluña. Observamos que los impuestos locales en negocios y propiedades disuaden a los nuevos establecimientos de fabricación. Es necesario limitar las opciones al alcance del mercado laboral local, y sobre todo controlar las economías de aglomeración a fin de identificar los efectos de los impuestos en la ubicación de nuevos establecimientos. Impuestos locales Ubicación de empresas Economías de aglomeración Regresión de Poisson