We describe the basic economic theory of pricing a congestible resource such as an ftp server, a router, a Web site, etc. In particular, we examine the implications of “congestion pricing” as a way to encourage efficient use of network resources. We explore the implications of flat pricing and congestion pricing for capacity expansion in centrally planned, competitive, and monopolistic environm...

By employing dynamic pricing, the act of changing prices over time within a marketplace, sellers have the potential to increase their revenue by selling goods to buyers “at the right time, at the right price.” As dynamic pricing systems become necessary as a competitive maneuver and as market mechanisms become more complex, there is a greater need for pricing agents to be used, and also a great...

We study the effects of different pricing strategies available to a production–inventory system with capacitated supply, which operates in a fluctuating demand environment. The demand depends on the environment and on the offered price. For such systems, three plausible pricing strategies are investigated: static pricing, for which only one price is used at all times, environment-dependent pric...

T price for a product may be set too low, causing the seller to leave money on the table, or too high, driving away potential buyers. Contingent pricing can be useful in mitigating these problems. In contingent pricing arrangements, price is contingent on whether the seller succeeds in obtaining a higher price within a specified period. We show that if the probability of obtaining the high pric...

The relation between the volatilities of pricing kernels associated with different currencies and the volatility of the exchange rate between the currencies is derived under the assumption of integrated capital markets, and the volatilities of the pricing kernels are related to the foreign exchange risk premium. Time series of pricing kernel volatilities are estimated from panel data on bond yi...

We study the envy free pricing problem faced by a seller who wishes to maximize revenue by setting prices for bundles of items. Consistent with standard usage [9] [10], we define an allocation/pricing to be envy free if no agent wishes to replace her allocation (and pricing) with those of another agent. If there is an unlimited supply of items and agents are single minded then we show that find...

Tuenter considered centered binomial sums of the form Sr(n) = 2n ∑

This paper examines the conditions required to guarantee positive prices in the CAPM. Positive prices imply an upper bound on the equity premium. This upper bound depends on the degree of diversity of firms’ fundamentals, and it is independent of investors’ preferences. In economies with realistically diverse assets the only positive-price CAPM equilibrium theoretically possible is a degenerate...

We consider the standard discrete-time model of a frictionless financial market and show that the law of one price holds if and only if there exists a martingale density process with strictly positive initial value. In contrast to the classical no-arbitrage criteria, this density process may change its sign. We also give an application to the CAPM.