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Economics of Cognitive Radio
Published in Mohamed Ibnkahla, Cooperative Cognitive Radio Networks, 2018
Fixed-price trading models are exclusive-use economic models most commonly used by WSPs to distribute short-term leases for access rights to end users. As buyers are price takers, practical models tend to have fewer variables to consider than the more complex auction models. Buyers in fixed-price markets are nearly always end users, and a simpler system that does not require the end users to bid may have its advantages. For example, ease of entry encourages the development of new businesses. Revenue generated in fixed-price markets is not as high as auctions, since users are aware of prices. If prices are below the users’ reservation price (the highest price the user is willing to pay), the user saves the difference. However, in most auctions, bidders must compete against others without knowing any of the bids. To maximize the probability of a winning bid, buyers bid their reservation price.
Methods for Valuing Producers' Uses of Water
Published in Robert A. Young, John B. Loomis, Determining the Economic Value of Water, 2014
Robert A. Young, John B. Loomis
Functions such as bearing risks, managing, and innovating need to be effectively performed for the firm to survive in a dynamic economy, so all will require a return or payment to summon them into production. In some cases, owned inputs can be priced by appealing to opportunity cost or reservation price. Opportunity cost of an owned input is the forgone benefit in the best alternative use. If the input is to some degree marketed, or similar inputs marketed, the prevailing or expected market price can be considered an appropriate measure of opportunity cost. If competitive markets are absent, the problem will be more complex. That is not to say that the markets for capital, managers, and land are irrelevant; factor owners are assumed to consider their own attributes (such as entrepreneurial and management skills, amount of capital, and aversion to risk) in deciding whether to offer their resources on markets (to be hired by other firms) or risk these resources by forming a firm and engaging in private production. Hence, the market rates will provide some guidance as to the opportunity costs of nonwater inputs. The second, related concept is the reservation price, the price required for the resource owner to offer the service or input to the enterprise in question. The reservation price concept applied to owned inputs seems clear enough in theory, but in application is likely to be subjective. Some ingenuity will be required to quantify it in practice for applied residual analyses.
Dynamic pricing policy and revenue management
Published in Bijan Vasigh, Ken Fleming, Thomas Tacker, Introduction to Air Transport Economics, 2018
Bijan Vasigh, Ken Fleming, Thomas Tacker
First-degree price discrimination, also called perfect price discrimination, involves charging the maximum amount each customer is willing and able to pay. In economic terms, this maximum price is called the reservation price. A consumer surplus occurs when the consumer is willing to pay more for a given product than the current market price. For example, if a passenger is willing to spend up to €5,400 on a round-trip first-class flight from LHR to JFK, but he or she is able to purchase the ticket for just €4,700, the consumer surplus from the transaction is €700.
Use of opaque sales channels in addition to traditional channels by service providers
Published in International Journal of Production Research, 2018
Bo Feng, Wei Liu, Zhaofang Mao
The heterogeneous market consists of both leisure and business customers, who differ in terms of their reservation prices and preferences. The reservation price refers to a self-imposed limit on the price a consumer is prepared to pay for a good or a service. Given their reduced flexibility in terms of planning their travel, business customers exhibit a greater willingness to pay than leisure customers. The reservation price of business customers is given by , while that of leisure customers is 1. The proportion of business customers is given by ρ(0 ≤ ρ ≤ 1), while the remaining proportion, 1 − ρ, consists of leisure customers. Proportion β of business customers are loyal to service provider 1, while the remainder, i.e. are loyal to service provider 2. Here, we let . It means the two service providers are symmetric (see Fay 2008 and Chen, Gal-Or, and Roma 2014). Leisure customers are uniformly distributed along a segment of length one, which is known as the Hotelling model (Working and Hotelling 1929; d’Aspremontand, Gabszewicz, and Thisse 1979; Irmen and Thisse 1998).