We investigate the bearings of the level of demand on firms’ optimal locations and prices in a linear model of spatial differentiation with quadratic disutility of transportation. We show that demand affects both optimal prices and optimal locations of firms, in that firms increase product...

In a discrete setting, a model is developed for pricing a contingent claim in incomplete markets. Since hedging opportunities influence the price of a contingent claim, the optimal hedging strategy is first introduced assuming that a contingent claim has been issued: a strategy implemented by...

This essay argues that a liberalism that avoids legal moralism – that is neutral between rival conceptions of the good – cannot embrace intervention in commercial transactions, but is thereby precluded neither from identifying some such transactions as exploitative nor from...

This paper is the first to investigate rescheduling of distressed corporate debt when both the representative shareholder and the creditor face reservation prices. Parties expect from rescheduling both recovery and growth, but reservation prices are key dimensions to consider in the analysis in...

We extend Hotelling’s model of spatial competition by adding an outside good, provided by a webshop. Unlike the commonly used reservation price, the price of the webshop is endogenous. We establish that a Nash equilibrium exists if the outside good is not too different from the goods sold by...

Introduction of new products into the market place poses a difficult problem for the calculation of a cost-of-living (COL) index. The problem is that the reservation prices of new products in the periods before their introduction are unobservable. This paper introduces a new index number formula...

This paper considers price determination by monopolistic sellers who know the distribution of valuations among the potential buyers. We derive a novel condition under which the optimal price set by the monopolist is unique. In many settings, this condition is easy to interpret, and it is valid...

We consider fixed and asking price strategies in the context of selling an asset with Bernoullian updating of the seller’s subjective probability of sale at a given price. The determination of optimal fixed, asking and endogenous reservation prices is discussed under risk-neutrality and...

Consumer reservation price is a key concept in marketing and economics. Theoretically, this concept has been instrumental in studying consumer purchase decisions,competitive pricing strategies,and welfare economics. Managerially,knowledge of consumer reservation prices is critical for...

Suppose you are a Marketing Manager envisioning a new product, or an Operations Manager contemplating a process improvement, or a CEO who commissioned an integrated new product development team. If our assumptions hold, our model offers you a single numerical measure, called the degree of...