New railway legislation in Sweden has increased the need for transparent access charges on the Swedish railway network. We estimate cost functions for infrastructure operation, maintenance and renewal in the Swedish national railway network, using unobserved effects models and calculate marginal costs for railway infrastructure wear and tear. We find evidence of unobserved fixed effects at a tr...

This paper extends the standard monopoly quality differentiation model by Mussa and Rosen (1978) to an environment where the production of a (qualitydifferentiated) product-line involves initial fixed investments in common assets such as production facilities or R&D. The fixed cost depends solely on the level of the highest quality, and the invested asset is shared among all the qualities in th...

We analyze the forces that can generate retirement in different versions of standard life cycle models of labor supply. While nonconvexities in production can generate retirement, we show that the size of nonconvexities needed increases sharply as the intertemporal elasticity of substitution for labor decreases. ∗We thank Eric French, Steve Davis, Yongsung Chang plus seminar and conference part...

Many industries with avoidable fixed costs face competitive price instability problems in an attempt to maintain profitability. We designed an experimental environment where profitability is eroded by the addition of sunk and avoidable fixed costs. While we cannot reject the hypothesis that sunk fixed costs have no effect on prices, we observe a pattern of price signaling and responses which ma...

Advances in information technology and computational power have opened the doors for auctioneers to explore a range of auction formats by considering varying degrees of bid expressivity and different payment rule, e.g., single price vs. discriminatory prices. While it is clear that one can design more complicated auctions, it is still not clear if should do so and which auction parameters have ...

This paper studies a two-sided search model with the following characteristics: there is a continuum of agents with different types in each population, match utility is nontransferable, and agents incur a fixed search cost in each period. When utility functions are additively separable in types and strictly increasing in the partner’s type, there is a unique matching equilibrium. It exhibits pe...

The present study introduced a novel hierarchical hub set covering problem with capacity constraints. This study showed the significance of fixed charge costs for locating facilities, assigning hub links and designing a productivity network. The proposed model employs mixed integer programming to locate facilities and establish links between nodes according to the travel time between an origin-...

In real-time systems, demand paging has not been used since worst case performance analysis technique for demand paging is not available. In this paper, we propose a technique to obtain the worst case bound on the demand paging costs and devise a worst case response time analysis framework considering the demand paging costs. We divide the technique into two different methods, DP-Pessimistic an...

We consider the problem of portfolio selection, with transaction costs and constraints on exposure to risk. Linear transaction costs, bounds on the variance of the return, and bounds on different shortfall probabilities are efficiently handled by convex optimization methods. For such problems, the globally optimal portfolio can be computed very rapidly. Portfolio optimization problems with tran...

We investigate the complexity and approximability of network ow improvement problems. In these problems, one incurs costs for increasing the capacity of an edge, while the goal is to achieve a ow of maximum value through the network. We study several improvement strategies. Furthermore, we investigate the relationship of network ow improvement problems to network xed cost ow problems, where one...