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Article
Publication date: 18 July 2008

Devon DelVecchio and Adam W. Craig

This research aims to integrate two theories of reference price formation and to test the resulting exemplar‐prototype hybrid (EPH) model's predictions. Study 1 tests the…

Abstract

Purpose

This research aims to integrate two theories of reference price formation and to test the resulting exemplar‐prototype hybrid (EPH) model's predictions. Study 1 tests the predictions of the EPH model regarding price attractiveness ratings. Study 2 helps to document the process by which the EPH model operates.

Design/methodology/approach

The investigation consists of a pair of laboratory experiments that manipulate the skew (positive, negative) of historic price data, and the frequency of the modal price (high, low) in the price history.

Findings

Both the skew of prices to which consumers are exposed and the frequency with which the modal price occurs affect recall of the modal price and evaluations of the attractiveness of subsequent prices.

Research limitations/implications

Consumers rely on information about both the price range and individual price points to form reference prices. Common models of reference price effects may be improved by including a non‐linear estimate of the effect of modal price frequency.

Practical implications

Managers are advised to offer a consistent regular price from which occasional discounts of varying value are offered to create a strong memory trace in consumers' minds for the higher “regular” price and avoid such a trace for any one discounted price.

Originality/value

Prior studies detail aspects of the relationship between reference prices and the attractiveness of market prices. This is the first attempt to integrate, rather than contrast, the two predominant types of theories (range‐based, price‐point based) of reference price formation.

Details

Journal of Product & Brand Management, vol. 17 no. 4
Type: Research Article
ISSN: 1061-0421

Keywords

Book part
Publication date: 18 March 2014

Kevin W. Caves and Hal J. Singer

In antitrust class-action litigation, courts are increasingly unlikely to accept the presumption that all class members were harmed by price-fixing among a group of firms or by…

Abstract

In antitrust class-action litigation, courts are increasingly unlikely to accept the presumption that all class members were harmed by price-fixing among a group of firms or by exclusionary behavior by a single firm. Econometric methods typically applied in antitrust and other settings estimate the average effect of the challenged conduct, but do not inform impact for individual class members. We present classwide econometric methods and statistical tests for detecting the existence (or lack thereof) of common impact and determining what proportion (if any) of the proposed class suffered injury in many class actions. We conclude that econometric tools can meaningfully inform the legal process, even when courts demand proof of common impact.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

Keywords

Article
Publication date: 1 September 2022

Noureddine Benlagha and Wael Hemrit

The present work endeavors to explore the potential nonlinear and asymmetric effects of supply fundamental properties of Bitcoin mining process (velocity, size and stock of…

Abstract

Purpose

The present work endeavors to explore the potential nonlinear and asymmetric effects of supply fundamental properties of Bitcoin mining process (velocity, size and stock of Bitcoins, cost of production and mining revenue), DJIA, VIX, economic policy uncertainty and Google Trend on the price of Bitcoin (PB).

Design/methodology/approach

The authors apply the Nonlinear Autoregressive Distributed lag (NARDL) approach for the period from November 31, 2013 to December 30, 2020.

Findings

The asymmetric effects of inflation, the size of Bitcoin economy, reveal a positive impact on the PB in the short and long run. In the short run, Bitcoin price shows negative statistically significant sensitivity to positive (negative) changes in DJIA (VIX) index. In addition, Google Trends have an impact on Bitcoin prices indicating that the Bitcoin market is also driven by investors' sentiments. In the long run, negative policy uncertainty shocks increase the PB while in the short run, negative shocks decrease it.

Originality/value

The authors give credence to the best ways of understanding the existence of asymmetries in the link between the PB and a number of influential macro-finance variables to improve the appropriate asset allocation and portfolio management.

Details

Managerial Finance, vol. 49 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Open Access
Article
Publication date: 10 July 2024

Arnab Bhattacharjee and Chris Jensen-Butler

We propose an economic model of housing markets. The model incorporates the macroeconomic relationships between prices, demand and supply. Since vacancy rates are not observable…

Abstract

Purpose

We propose an economic model of housing markets. The model incorporates the macroeconomic relationships between prices, demand and supply. Since vacancy rates are not observable, the demand-supply mismatches are identified using a microeconomic model of search, matching and price formation. The model is applied to data on regional housing markets in England and Wales.

Design/methodology/approach

Economic theory combining macroeconomics and microeconomics together with new generation econometric methods for empirical analysis.

Findings

The empirical model, estimated for the ten government office regions of England and Wales, validates the economic model. We find that there is substantial heterogeneity across the regions, which is useful in informing housing and land-use policies. In addition to heterogeneity, the model enables us to better understand unrestricted inter-regional spatial relationships. The estimated spatial autocorrelations imply different drivers of spatial diffusion in different regions.

Research limitations/implications

In the nature of other empirical work, the findings are subject to specificities of the data considered here. The understanding of spatial diffusion can also be further developed in future work.

Practical implications

This paper develops a nice way of closing macroeconomic models of housing markets when complete demand, supply and pricing data are not available. The model may also be useful when data are available but with large measurement errors. The model comes together with corresponding empirical methods.

Social implications

Implications for the housing market and other regional policies are important. These are context-specific, but some implications for housing policy in the UK are provided in the paper as an example.

Originality/value

Unique housing market paper combining both macroeconomic and microeconomic theory as well as both theory and empirics. The rich framework so developed can be extended to much future work.

Details

Asian Journal of Economics and Banking, vol. 8 no. 2
Type: Research Article
ISSN: 2615-9821

Keywords

Article
Publication date: 15 February 2011

Kaj Storbacka and Suvi Nenonen

The purpose of this paper is to contribute to the development of a general theory of the market, by defining markets as configurations and exploring: how market configurations…

3389

Abstract

Purpose

The purpose of this paper is to contribute to the development of a general theory of the market, by defining markets as configurations and exploring: how market configurations emerge and evolve in a business‐to‐business context; how a market actor can influence market configurations; and what kinds of market configuration capabilities actors need to develop.

Design/methodology/approach

The topic is approached by theoretical analysis and conceptual development.

Findings

Markets can be viewed as configurations of market actors engaging in market practices. Market configurations are perpetually dynamic as new actors enter the context, and as actors introduce ideas and business model elements to the network. As a result the configuration's marketness evolves towards higher levels of configurational fit, resulting in increased value co‐creation opportunities. An actor wanting to influence the market configuration can do so by working on its mental models and business models. The power of the actor's mental and business models is mediated by the actor's network position, its clout, and the fact that a change in any element evokes reactions from other actors. Actors need to develop new sets of market capabilities, such as value sensing, the ability to measure markets, price formation and pricing logics, and market scripting.

Originality/value

For a scholarly audience the paper contributes to the discussion on how markets are redefined from being places where demand and supply meet and reach equilibrium, to being spaces where actors integrate resources to co‐create value. For a practitioner audience it offers ideas on how firms can shape their markets in their favour.

Details

European Journal of Marketing, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 15 July 2019

Tobias Brünner

This study aims to investigate – theoretically and empirically – if call auctions incorporate asymmetric information into prices.

Abstract

Purpose

This study aims to investigate – theoretically and empirically – if call auctions incorporate asymmetric information into prices.

Design/methodology/approach

First, this study introduces a new model of price formation in a call auction with insider information. In this call auction model, insider trading gives rise to an asymmetric information component of transaction costs. Next, this study estimates the model using 20 stocks from Euronext Paris and investigates if the asymmetric information component is present.

Findings

The theoretical analysis reveals that call auctions incorporate asymmetric information into prices. The empirical analysis finds strong evidence for the asymmetric information component. Testable implications provide further support for the model.

Practical implications

Call auctions have recently been proposed as an alternative to continuous limit order book markets to overcome problems associated with high-frequency trading. However, it is still an open question whether call auctions efficiently aggregate asymmetric information. The findings of this study imply that call auctions facilitate price discovery and, therefore, are a viable alternative to continuous limit order book markets.

Originality/value

There is no generally accepted measure of trading costs for call auctions. Therefore, the measure introduced in this study is of great value to anyone who wants to quantify trading costs in call auctions, understand the determinants of trading costs in call auctions or compare trading costs and their components between continuous markets and call auctions. This study also contributes to the literature devoted to estimating the probability of information-based trading.

Details

Studies in Economics and Finance, vol. 36 no. 3
Type: Research Article
ISSN: 1086-7376

Keywords

Abstract

Details

Understanding Financial Risk Management, Third Edition
Type: Book
ISBN: 978-1-83753-253-7

Book part
Publication date: 28 October 2019

Angelo Corelli

Abstract

Details

Understanding Financial Risk Management, Second Edition
Type: Book
ISBN: 978-1-78973-794-3

Article
Publication date: 1 December 1998

Dag Kolsrud and Ragnar Nymoen

We present a dynamic model of real wages in the open economy that encapsulates the well‐known “competing claims model” or “incomplete competition model” of real wage…

2083

Abstract

We present a dynamic model of real wages in the open economy that encapsulates the well‐known “competing claims model” or “incomplete competition model” of real wage determination. In general, the model determines the development of inflation, real wages and the real exchange rate for any given rate of unemployment. Inflation, rather than unemployment, is the “conflict solver” in the unrestricted model. However, a supply side determined equilibrium rate of unemployment is subsumed as a special case. A re‐appraisal of the empirical literature shows that there is little evidence in support of the “natural rate” restrictions.

Details

Journal of Economic Studies, vol. 25 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 30 July 2010

Charis Marentakis and Dimitrios Emiris

The purpose of this paper is to propose a conceptual architecture for the development of an auction business‐to‐consumer marketplace where sellers offer available resources and…

1154

Abstract

Purpose

The purpose of this paper is to propose a conceptual architecture for the development of an auction business‐to‐consumer marketplace where sellers offer available resources and services aiming to maximize their revenue while on‐the‐move travelers bid for them subject to the geographical area they are located in.

Design/methodology/approach

Based on previous findings from the literature and aggregate results from a preliminary field survey, core communication requirements, marketplace architecture, and communication workflows are presented.

Findings

Findings from the literature and field study exhibit a great potential for the successful use of location sensitive auction applications in tourism sector. Mobile auctions seem attractive for the efficient allocation and pricing of travel resources by abolishing the internet's barriers related to travelers computing requirements; furthermore, location‐based services (LBS) may reduce significantly the communication costs for sellers. The proposed marketplace is beneficial for a number of stakeholders beyond sellers, like auctioneer, mobile communications providers, and LBS providers.

Research limitations/implications

The proposed architecture is in conceptual form and is currently under development. Infrastructure issues (like communication load, required bandwidth and protocol) are being investigated. Future research will focus on the integration of the architecture in an extended multi‐provider environment forming virtual enterprises. The viability and acceptance of the proposed model should be further investigated through an extended detailed market survey.

Originality/value

To the authors' best knowledge it is the first attempt to propose a location‐sensitive auction marketplace for tourism services.

Details

Journal of Hospitality and Tourism Technology, vol. 1 no. 2
Type: Research Article
ISSN: 1757-9880

Keywords

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