Reservation Price

Garcia-Fontes and Motta57 study the regulation of freedom of establishment or entry and the prices of these distribution services. They use a variant of Hotelling s model (horizontal differentiation by location throughout a linear city ). The originality here lies in the fact that the consumers have a high but finite reserve price. This condition means that the market may not be covered, and hence the positive effects of perfect competition may not occur. 

Price decisions on how to set posted prices, individual-offer prices and reserve prices in auctions how to price across categories how to price over time how to markdown (discount) over the product lifetime... 

Setting an auction reserve price would only have no impact in two unlikely situations. First, with very weak emission targets (or extremely cheap abatement) the allowance price might drop to... 

Second, if ETS prices are already well above the reserve price,, PMIN, then the reserve price is irrelevant - the allowances will be sold at a clearing price above Nevertheless, even in this situation, auctions provide indirect beneficial effects, including greater price stability ex ante, and hence increased investment in low-carbon technologies. 

Auctions offer some additional approaches to providing a basis for a clear, long-term carbon price signal. First, the mechanisms discussed above could be used to create a long-term price floor . This could be implemented by auctioning all allowances with a reserve price equal to the price floor, coupled with a government commitment to repurchase allowances at the price floor. If credible, a price floor would increase investor confidence in the profitability of low-carbon technology investments. 

Grubb, M., 2009, Reinforcing Carbon Markets under Uncertainty The Role of Reserve Price Auctions and Other Options, Climate Strategies Issues and Options Brief, 4 March [available atwww.climatestrategies.org/]. 

The bids submitted by carriers were input into a computer simulation that modeled a shipping lane scenario. The winning bids adequately provide transportation while preventing the total number of trucks from exceeding carrier specified capacity. The goal was to maximize the surplus for the shipper, defined as the amount below the shippers reservation price. The details of the model used to select the winning bids and allocation will be provided in section 1.9.3. 

The first step is to use a scatter plot to plot the points with the execution price on the x-axis and the reservation price on the y-axis. Once this step is carried out, the lower envelope of these points is obtained by moving up as far up as possible such that all points are on or to the right... 

Note that the envelope described above suggests that once bids are obtained from all suppliers, each supplier has an incentive to react to change his bid to become active. As an example, if supplier 1 were to change his bid to offer an execution price of 10 per unit and a reservation price of 33.25 per unit, it would add a point (10,33.25) that would enable this supplier to become active, and thus receive a portion of the buyers capacity reservation. Thus, competition across the suppliers causes interaction among their bids due to their desire to win and thus impacts the buyer s price. 

Additional details that could be incorporated (and that are in the papers by Iyer and Ye [50],[49]) adjust for the reservation price differences between the two segments. The following example illustrates the calculations. 

Table 4.1 provides the values of holding costs, reservation prices, and consumption rates for two stores with different characteristics. 

Since the supplier s opportunity cost s is known, the intermediary establishes the supplier s opportunity cost (s) = s. However, the intermediary may announce a reserve price Us v) based on her knowledge of the vector v and that Us v) > = s. It may be convenient to think that the intermediary... 

Thus, the intermediary s profit is determined by the difference between the buyers virtual willingness to pay and the supplier s opportunity cost. If the trade is to take place, there must be at least one buyer i such that " i vi) > = s). The intermediary could ensure that this is the case by stating a reserve price Us(v) > s. It can be shown that if i(ui) is a monotone strictly increasing function of Vi, for every ieM, one possible solution to the above auction maximization problem is as follows ... 

In other words, the intermediary offers the object to the buyer with the highest virtual valuation so long as it is above the reserve price. While the... 

Clearly, the buyer s marginal revenue is identical to her virtual valuation (3.37). In setting up the reserve price, the intermediary may be thought of as a buyer with a value and marginal revenue of zero. Thus, the intermediary offers the object to the buyer with the highest marginal revenue so long as it is positive (above her own). 

Reservation Prices A reservation price allows the buyer to place an additional constraint on the most she will pay for some items. This can arise, for example, due to a fall-back option such as an external commodity market. If the reservation prices are specified over bundles then... 

Pricing is a classical problem in the marketing literature (Kotler, 2000, Chap. 15). Questions related to pricing strategy and competition, promotions, auctions, and characterization of demand functions (reservation prices, elasticities and price effects) have been studied for many years. 

Zhao and Zheng [162] further examine the problem considered in [21] and focus on deriving structural properties of the solution. While [21] showed that if reservation prices are non-stationary that price may not decrease over time, Zhao and Zheng show a necessary condition for the property to hold, namely that the probability a customer is willing to pay a premium must not increase over time. If prices are limited to a discrete set, the authors show a set of critical numbers determine the optimal policy. 

Demand Input (DI) Price, Time, Inventory Sales, Ads, Products, Market Production, Reservation Price P,T,I, (words)... 

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