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Pricing in a Digital World (2015)
Dynamic pricing, especially as practiced by Uber and Lift, seems to be all the rage. In this case, we look at five interesting applications of...
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  • May 2021
  • Teaching Note

Zeynep Ton: The Good Jobs Strategy
By: Frances X. Frei, Francesca Gino and Youngme Moon
In Zeynop Ton’s 2014 book The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost Profits, Ton showed how operational excellence enables companies to offer the lowest prices to customers while ensuring good jobs for their...  View Details
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  • 2021
  • Working Paper

Which Markets (Don't) Drive Pharmaceutical Innovation? Evidence From U.S. Medicaid Expansions
By: Craig Garthwaite, Rebecca Sachs and Ariel Dora Stern
Pharmaceutical innovation policy involves managing a tradeoff between high prices for new products in the short-term and stronger incentives to develop products for the future. Prior research has documented a causal relationship between market size and pharmaceutical...  View Details
Keywords: Pharmaceuticals; Medicaid; Innovation and Invention; Policy; Markets; Research and Development; Pharmaceutical Industry
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  • 2021
  • Working Paper

Hidden Software and Veiled Value Creation: Illustrations from Server Software Usage
By: Raviv Murciano-Goroff, Ran Zhuo and Shane Greenstein
How do you measure the value of a commodity that transacts at a price of zero from an economic standpoint? This study examines the potential for and extent of omission and misattribution in standard approaches to economic accounting with regards to open source...  View Details
Keywords: Server Software; Open Source Distribution; Software; Data and Data Sets; Economics; Value Creation; Measurement and Metrics
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  • April 2021
  • Case

Zeynep Ton: The Good Jobs Strategy
By: Francesca Gino and Frances X. Frei
The link to this multimedia case should be provided to students in advance as preparation for classroom case discussion.

In Zeynop Ton’s 2014 book The Good Jobs Strategy: How the Smartest Companies Invest in Employees to Lower Costs and Boost...  View Details
Keywords: Organizations; Selection and Staffing; Compensation and Benefits; Operations; Performance Effectiveness
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  • 2021
  • Article

CDS Trading and Nonrelationship Lending Dynamics
By: Jung Koo Kang, Christopher Williams and Regina Wittenberg-Moerman
We investigate how credit default swaps (CDSs) affect lenders’ incentives to initiate new lending relationships. We predict that CDSs reduce adverse selection that nonrelationship lead arrangers face when competing for loans. Consistently, we find that a loan is...  View Details
Keywords: Credit Default Swaps; CDS Market; Non-relationship Lending; Debt Contracts; Adverse Selection; Lending Monitoring; Cross-selling
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  • 2021
  • Working Paper

Dynamic Competition for Customer Memberships
By: Cristian Chica and Jorge Tamayo
A competitive two-period membership (subscription) market is analyzed. Two symmetric firms charge a “membership” fee that allows consumers to buy products or services at a given unit price for both periods. Firms can choose between long- or short-term memberships. When...  View Details
Keywords: Competitive Price Discrimination; Membership; Dynamic Competition; Customers; Markets; Competition
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  • January 2021
  • Article

The Effects of Menu Costs on Retail Performance: Evidence from Adoption of the Electronic Shelf Label Technology
By: Ioannis Stamatopoulos, Achal Bassamboo and Antonio Moreno
We use the adoption of electronic shelf labels (ESLs) by an international grocery retailer in 2015 to identify the effects of physical menu costs (i.e., labor and material costs of price adjustment) on retail performance. We find that the installation of ESLs increased...  View Details
Keywords: Retail Operations; Dynamic Pricing; Revenue Management; Operations; Price; Revenue; Management; Retail Industry
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  • 2021
  • Working Paper

Corporate Environmental Impact: Measurement, Data and Information
By: David Freiberg, DG Park, George Serafeim and T. Robert Zochowski
As an organization’s environmental impact has become a central societal consideration, thereby affecting industry and organizational competitiveness, interest in measuring and analyzing environmental impact has increased. We develop a methodology to derive comparable...  View Details
Keywords: Environment; Impact; Measurement; Environmental Ratings; Corporate Valuation; Financial Materiality; Sustainability; Environmental Impact; Environmental Strategy; Impact-Weighted Accounts; IWAI; Environmental Sustainability; Corporate Social Responsibility and Impact; Measurement and Metrics; Valuation
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  • 2020
  • Article

Optimal, Truthful, and Private Securities Lending
By: Emily Diana, Michael J Kearns, Seth Neel and Aaron Leon Roth
We consider a fundamental dynamic allocation problem motivated by the problem of securities lending in financial markets, the mechanism underlying the short selling of stocks. A lender would like to distribute a finite number of identical copies of some scarce resource...  View Details
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  • January 2020
  • Article

The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation
By: Tatyana Deryugina, Alexander MacKay and Julian Reif
We study the dynamics of residential electricity demand by exploiting a natural experiment that produced large and long-lasting price changes in over 250 Illinois communities. Using a flexible difference-in-differences matching approach, we estimate that the price...  View Details
Keywords: Electricity Demand; Consumption Dynamics; Energy; Policy; Demand and Consumers; Price; Mathematical Methods
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  • December 2019
  • Case

CME Group in 2019
By: José B. Alvarez, Forest Reinhardt and Natalie Kindred
Chicago-based CME Group is the world’s largest futures and options marketplace, with annual trading volume of over 4.8 billion contracts in 2018. This case is set in late 2019, as heightened perceptions of risk stemming from the U.S.-China trade war are driving record...  View Details
Keywords: Financial Markets; Risk Management; Futures and Commodity Futures; Trade; Price; Competition; Risk and Uncertainty; Competitive Strategy; United States; China; Brazil
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  • December 2019
  • Article

Invest in Information or Wing It? A Model of Dynamic Pricing with Seller Learning
By: Guofang Huang, Hong Luo and Jing Xia
Pricing idiosyncratic products is often challenging because the seller, ex ante, lacks information about the demand for individual items. This paper develops a model of dynamic pricing for idiosyncratic products that features the optimal stopping structure and a seller...  View Details
Keywords: Dynamic Pricing; Idiosyncratic Products; Item-specific Demand; Demand Uncertainty; Active Seller Learning; The Value Of Information; Price; Information; Value; Learning
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  • Article

Economic Principles for Medicare Reform
By: Amitabh Chandra and Craig Garthwaite
In this article, we develop an economic framework for Medicare reform that highlights trade-offs that reform proposals should grapple with but often ignore. Central to our argument is a tension in administratively set prices, which may improve short-term efficiency but...  View Details
Keywords: Medicare; Value-based Care; Health Care Reform; Markets In Health Care; Health Care and Treatment; Value; Governing Rules, Regulations, and Reforms
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  • July 2019
  • Article

Optimal Capital Structure and Bankruptcy Choice: Dynamic Bargaining vs Liquidation
By: Samuel Antill and Steven R. Grenadier
We model a firm’s optimal capital structure decision in a framework in which it may later choose to enter either Chapter 11 reorganization or Chapter 7 liquidation. Creditors anticipate equityholders’ ex-post reorganization incentives and price them into the ex-ante...  View Details
Keywords: Default; Dynamic Bargaining; Capital Structure; Insolvency and Bankruptcy; Mathematical Methods
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  • 2021
  • Working Paper

Consumer Inertia and Market Power
By: Alexander MacKay and Marc Remer
We study the pricing decision of firms in the presence of consumer inertia. Inertia, which can arise from habit formation, brand loyalty, and switching costs, generates dynamic pricing incentives. These incentives mediate the impact of competition on market power. For...  View Details
Keywords: Consumer Inertia; Market Power; Dynamic Competition; Demand Estimation; Consumer Behavior; Markets; Performance; Competition; Price
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  • 2019
  • Working Paper

Managerial Quality and Productivity Dynamics
By: Achyuta Adhvaryu, Anant Nyshadham and Jorge Tamayo
Which managerial skills, traits, and practices matter most for productivity? How does the observability of these features affect how appropriately they are priced into wages? Combining two years of daily, line-level production data from a large Indian garment firm with...  View Details
Keywords: Learning-by-doing; Screening; Productivity; Non-cognitive Skills; Ready-made-garments; Management; Quality; Management Skills; Management Practices and Processes; Performance Productivity; Training; Compensation and Benefits; Apparel and Accessories Industry; India
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  • November–December 2018
  • Article

Online Network Revenue Management Using Thompson Sampling
By: Kris J. Ferreira, David Simchi-Levi and He Wang
We consider a network revenue management problem where an online retailer aims to maximize revenue from multiple products with limited inventory constraints. As common in practice, the retailer does not know the consumer's purchase probability at each price and must...  View Details
Keywords: Online Marketing; Revenue Management; Revenue; Management; Marketing; Internet; Price; Mathematical Methods
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  • 2018
  • Working Paper

Opportunistic Returns and Dynamic Pricing: Empirical Evidence from Online Retailing in Emerging Markets
By: Chaithanya Bandi, Antonio Moreno, Donald Ngwe and Zhiji Xu
We investigate how dynamic pricing can lead to more product returns in the online retail industry. Using detailed sales data of more than two million transactions from the Indian online retail market, where price promotions are very common, we document two types of...  View Details
Keywords: Cash On Delivery; Dynamic Pricing; Online Retail; Payment Methods; Strategic Customer Behavior; Opportunistic Returns; Price; Policy; Consumer Behavior; Emerging Markets; Retail Industry
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  • September 2018
  • Article

Asset Price Dynamics in Partially Segmented Markets
By: Robin Greenwood, Samuel G. Hanson and Gordon Y. Liao
We develop a model in which capital moves quickly within an asset class but slowly between asset classes. While most investors specialize in a single asset class, a handful of generalists can gradually reallocate capital across markets. Upon the arrival...  View Details
Keywords: System Shocks; Asset Pricing
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  • Working Paper

The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation
By: Tatyana Deryugina, Alexander MacKay and Julian Reif
Economic theory suggests that demand is more elastic in the long run relative to the short run, but evidence on the empirical relevance of this phenomenon is scarce. We study the dynamics of residential electricity demand by exploiting price variation arising from a...  View Details
Keywords: Energy; Demand and Consumers; Price; Policy; Mathematical Methods
Related

Are you looking for?

Pricing in a Digital World (2015)
Dynamic pricing, especially as practiced by Uber and Lift, seems to be all the rage. In this case, we look at five interesting applications of...
→ Search All HBS Web