Name
Abstract | ||
|---|---|---|
The Lerner relationship linking the profit-maximizing price to marginal cost and the elasticity of demand generalizes to the price-setting newsvendor, and the result resolves the puzzle over the different effects of additive and multiplicative uncertainty on the solution. Multiplicative uncertainty increases the optimal price because it increases the marginal cost of a unit sold and does not affect the markup factor. Additive uncertainty has no effect on the marginal cost of a unit sold and lowers the markup factor because it increases the elasticity of the average quantity sold with respect to price. This paper was accepted by Martin Lariviere, operations management. |
Year | DOI | Venue |
|---|---|---|
2011 | 10.1287/mnsc.1110.1388 | Management Science |
Keywords | Field | DocType |
simple economics,average quantity,lerner relationship,profit-maximizing price,price-setting newsvendor problem,martin lariviere,markup factor,multiplicative uncertainty,marginal cost,demand generalizes,optimal price,additive uncertainty,cost analysis,marketing,uncertainty,pricing | Economics,Newsvendor model,Extended newsvendor model,Marginal revenue,Multiplicative function,Price elasticity of demand,Microeconomics,Marginal cost,Limit price,Elasticity (economics) | Journal |
Volume | Issue | ISSN |
57 | 11 | 0025-1909 |
Citations | PageRank | References |
10 | 0.55 | 1 |
Authors | ||
2 | ||
Name | Order | Citations | PageRank |
|---|---|---|---|
| Michael Salinger | 1 | 10 | 0.55 |
| Miguel Ampudia | 2 | 10 | 0.55 |