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This paper shows that consumer preference heterogeneity affects whether multinational firms serve local markets via imports or local production. Firms are least likely to choose local production over imports for product varieties that have relatively inelastic demand because transport costs have a smaller impact on the firm’s local profits for these products. The results suggest that there is complementarity between centralized production, with local market access via imports, and strategies that maintain low price elasticities at the brand level, such as advertising and within-brand product proliferation. A partial equilibrium study of the laundry detergent industry in Western Europe illustrates how firms and consumers interact at different levels of transport costs and reveals the product varieties that are most and least likely to be manufactured locally when transport costs are high.

It is demonstrated how an analysis of airports’ cost structures and the calculation of long-run marginal costs (MCs) of serving passengers and airplanes can be used as a basis for setting airport charges according to the principles of welfare economics. Based on Norwegian data, the MC for an extra passenger (PAX) and extra air traffic movement (ATM) are used to set airport charges under the assumption that the charges should be equal for all airports in the country. When adjusting the estimates to meet revenue restrictions and comparing the estimates to current charges, we observe that PAX should be charged more and ATM less. This finding is in line with recommendations from the International Air Transport Association (IATA). When allowing charges to vary between airports, we demonstrate how a Ramsey pricing approach can be applied to set differentiated PAX and ATM charges, considering both the supply side (the competitive conditions between the airlines operating at the airports) and the demand side (the passengers’ price elasticity of demand).

The few management accounting pricing methods in the management accounting literature are ineffective in helping small firms use their idle capacity during lingering economic recessions, and some of these methods may even worsen this problem.

Extending the traditional break-even-cost-volume-profit model, we derive a more effective pricing method, the break-even-full-capacity-utilization (BEFCU) model, to handle this problem. Seeking full capacity utilization, the BEFCU model has two characteristics: (a) highlighting the importance of the exigent fixed cost category for utilizing idle capacity and (b) using a functional cost structure that focuses on a hierarchy of value drivers in the firm's value creation process. Accordingly, under the BEFCU model, management has an instrumental pricing continuum extending from the minimum acceptable BEFCU sale price to the regular sale price.

To demonstrate its practicality, the authors apply the BEFCU model to an actual job shop. This model integrates certain strategies based on built-in flexibility in commitments with suppliers and customers and maintaining a mode of conservatism in accounting for plant assets. The model can also help small tooling companies currently seeking entrance into China; it may take a while for these companies to gain a foothold in this new market because copyrights and other legalities are rarely enforced (Bunkley, 2004).

This research estimates a multi-product flexible cost function of airport variable costs. Data for the analysis are a panel of 50 airports from 1996 to 2008. Output includes domestic and international departures, non-aeronautical operating revenues, and the number of transport workload units, where a workload unit is a passenger or the equivalent of a 220 pound packet of cargo. The quasi-fixed factor is the equivalent number of 10,000′ × 150′ runways at an airport. After correcting for first-order serial correlation, the analysis finds that airports operate under constant returns to runway utilization and multi-product decreasing returns to scale, production technology is consistent with product specific returns to capacity utilization and anti-complementarity across outputs, and general airport operations have input substitution possibilities with personnel and contractual repair/maintenance inputs. The study also finds 1.05% technology progress over the sample period, due to strong growth prior to 2001, with similar productivity growth rates for large and medium hubs.