in this paper, first, a new criterion, titled “surplus percent of the customers” is defined for static transmission expansion planning in restructured power systems. then by a simple example, the new criterion is compared with some already presented market-based criteria and it is shown that the new criterion can realistically evaluate the transmission network expansion from the market view. in...

We analyze minimum rate of return guarantees for life insurance (investment) contracts and pension plans with a smooth surplus distribution mechanism. We specifically model the smoothing mechanism used by most Danish life insurance companies and pension funds. The annual distribution of bonus will be based on this smoothing mechanism after taking the minimum rate of return guarantee into accoun...

Automobile manufacturers make frequent use of promotions that give cash-back payments. Two common types of cash-back promotions are rebates to customers, which are widely publicized to potential customers, and rebates to dealers, which are not publicized. While the payments nominally go entirely to one party or another, the real division of the manufacturer-supplied surplus between dealer and c...

Conventional marketing wisdom holds that a customer orientation provides a firm with a better understanding of its customers, which subsequently leads to enhanced customer satisfaction and firm performance. However, there are cautions that being too customer focused can lead to inertia, and anecdotal evidence suggests that it may be better to "ignore your customer" when developing new products....

When large capacity distributed generation including photovoltaic (PV) systems are installed in power systems, reverse power flow from PV systems may cause problem of surplus electric power. To reduce the reverse power flow without the reduction of PV power generation, energy management of customer equipment such as electric water heater is one of the solutions. Therefore, cooperative control o...

The reliability of distribution networks is inherently low due to their radial nature, consequently distribution companies (DisCos) usually seek to improve the system reliability indices with the minimum possible investment cost. This can be known as system-oriented reliability planning (SORP). However, there can exist some customers that are not satisfied by their reliability determined by ado...

We study the welfare implications of scalable price targeting, an extreme form of third-degree price discrimination implemented with machine learning for a large, digital firm. Targeted prices are computed by solving the firm’s Bayesian Decision-Theoretic pricing problem based on a database with a high-dimensional vector of customer features that are observed prior to the price quote. To identi...

We introduce three types of consumer recognition: identity recognition, asymmetric preference recognition, and symmetric preference recognition. We characterize price equilibria and compare profits, consumer surplus, and total welfare. Asymmetric preference recognition enhances profits compared with identity recognition, but firms have no incentive to exchange information regarding customer-spe...

Using data on mobile phone handset sales from a single retail store, we examine the impact of different retail responsibility designations and vertical contracts on seller service provision, firm profitability, and social welfare. During our sample, this store switched from retailer-managed retailing with linear pricing contracts to manufacturermanaged retailing with revenue sharing. We estimat...

In many financial markets, dealers have the advantage of observing the orders of their customers. To quantify the economic benefit that dealers derive from this advantage, we study detailed data from Canadian treasury auctions, where dealers observe customer bids while preparing their own bids. In this setting, dealers can use information on customer bids to learn about (i) competition, i.e. th...