The Threshold-Crossing Effect: Just-Below Pricing Discourages Consumers to Upgrade

Inflation was not always defined as an increase in the price level. It used to be defined as an increase in the money supply. Then, in the discussion of the definition, it was noted that such increases were often accompanied by increases in prices of both assets and goods. The increase in the money supply was the inflation; the rise in the price level was an associated effect of inflation. That definitional focus of inflation on the money supply was abandoned as economists started to develop better measures of the price level. As they explored the problems with measuring the price level, they developed conventions as to what goods would be included in “inflation.” Eventually, inflation became thought of as the change in the price level of produced goods. Economists created formal measures of output (produced goods) and price indices, developing well-specified concepts such as real GDP, GDP Deflator, CPI, core CPI, and CPE, among others. People’s conceptions of inflation followed those formal measures, and earlier monetary definitions of inflation faded. That led to the way most people think of inflation today — as an increase in the price level of goods as measured by a produced goods inflation index. What is left out of these “produced goods price” definitions of inflation is assets. Thus, as inflation has become associated with changes in the price level of produced goods, the price of assets slowly moved out of definition of inflation, and what might be called asset inflation fell from economist’s radar screen. The problem with that definition of inflation as only relating to produced goods is an arbitrary convention — a convention that hides the inescapable definitional ambiguity surrounding inflation. It is that definitional ambiguity that makes it difficult to discuss the recent history of inflation, which has experienced large increases in the money supply, but only small increases in the goods prices. Is this an inflationary period? It would definitely be an inflationary period in the earlier money supply definition of inflation. In that earlier definition, the increases in the money supply would be seen as the likely cause of an asset inflation.

The tendencies in the development of the hotel industry in Europe and in Poland in particular are analyzed. Extensive and relevant statistical material was taken from booking sites as of November 2022. Most often, the analysis of economic tendencies in the development of the hotel industry is based on expert assessments or statistical data from travel agencies. The conducted analysis is based on mathematical modeling and the use of Microsoft Excel mathematical and statistical tools. The world market of hotel services is constantly changing, has a dynamic structure, develops in interaction with other markets of goods and services, is influenced by the market environment. Therefore, modern hotels have to adapt to a new type of tourists with rather high requirements for accommodation conditions. In Europe, there is a tendency to stay in 1* and 2* hotels. The study covers data from the Polish city of Krakow. These data represent the spatial series, on the basis of which regression mathematical models are built for evaluating the tendencies of changes in the level of prices for the corresponding hotel rooms. The series are spatial because the data are collected at a specific point in time, but from different objects located geographically at different points. The built models are not representative, but they provide an opportunity to assess the tendencies of price growth or decline and the possibility of entering into crisis economic occurrences. The work is devoted to the analysis of tendencies of changes in hotel room prices and the evaluation of these changes using the construction of regression economic-mathematical models of space and time series. The relevance and significance of the study lies in the analysis and assessment of price tendencies for standard hotel rooms in the popular segment of 1* and 2* hotels in Poland. This country is Ukraine’s closest neighbor, therefore the study of economic trends in the development of its hotel industry is relevant not only for tendencies in Europe, but also for the future of the hotel segment of our country. The conducted analysis showed the presence of a mathematically defined tendency towards a moderate increase in prices for «standard» hotel rooms. The price function for these hotel rooms is an increasing one, but it does not cross the growth limit of the corresponding exponential function built on the same spatial number series. But such a tendency should not lead to any crisis occurrences in the hotel sector of Poland

The purpose of this study was to determine and analyze the effect of price perception and promotion on purchasing decisions at the Kacang Telor Bebe Company. The research method used in this study is quantitative research with a population survey approach. In this study, the purchase decision was made with a sampling method using accidental sampling, which obtained a sample of 100 people. The technique used in this research is multiple linear regression. The results of data analysis show that price perception and promotion have a significant effect simultaneously and partially on competitive advantage in the Kacang Telor Bebe Company. Therefore, the Peanut Telor Bebe Company must make adjustments to Price Perceptions and increase Promotions so as to create a significant Purchase Decision.

The paper analyses the challenges faced by the National Competition Authorities (NCA) of the emerging economies in the application of the econometric tests usually relied on in the merger control analysis. The relevant market and the degree of market concentration are usually defined on the basis of two econometric tests, namely, the Small but Significant and Non-Transitory Price Increase (SSNIP) test and the Herfindahl-Hirschman Index (HHI). Following the example of the US and the EU Merger Guidelines, the newly established NCAs of the emerging economies often refer to these two econometric tests in their merger guidelines without taking in consideration the challenges that they will have to face in applying them. The paper is a case study on Brazil and Argentina, and it aims at defining such challenges. The paper argues in favour of granting a broader margin of discretion to the NCAs of the emerging economies in applying such tests and in favour of the possibility to introduce alternative parameters to apply such tests in comparison to those ones identified by the US and the EU Merger Guidelines.

Critical Loss: Modeling and Application Issues

The impact of public health insurance on price and output of medical care is analyzed within the context of monopolistic markets for health services. An important result, which is not obtained in competitive markets, is that indemnity benefits cause smaller price increases than service benefits, both directly and indirectly through the effect of benefit structure on the production of information. Various types of price regulation are considered, including limitation to “usual, customary, and prevailing” levels, a frequently used technique. With a simple dynamic model this type of regulation is shown to cause chronic price inflation.

Housing supply and housing bubbles

How do buyers judge prices? How do they know whether a product or service is priced reasonably, is a good deal or is too expensive? Do buyers perceive all price increases and all price promotions? Do price promotions and price increases necessarily change buyer behavior? How do buyers process the plethora of price information they encounter each day? Economists contend that price primarily represents the monetary sacrifice to obtain a product or service. Behavioral price researchers argue that more complex phenomena are involved. Buyers have individual, internal norms against which they judge prices. There are threshold points below which buyers do not perceive price changes. There are also specific ranges of prices buyers find acceptable for a particular product. Despite over four decades of behavioral price research, we know little about the root causes of these buyer responses to price information. This article is the first of several planned essays that will review the historical, theoretical and empirical developments in the field of behavioral price research. In this first review, we examine the core concepts behind buyer responses to price as well as the complex way that people process numbers. The objective of these essays is to bring focus to, clarify conceptual definitions, examine empirical developments and raise future research questions for this field of study.

Purpose A review of past scholarly work on pricing issues in hospitality has revealed a lack of focus on customers’ demographic profiles. However, research in other disciplines reveals that understanding price perception differences among groups of customers with different demographics, including culture, is an important consideration when offering pricing strategies. The purpose of this paper is to contribute to the body of pricing research by exploring the effect of hotel guests’ demographics on their perception of hotel room prices. Design/methodology/approach Through Qualtrics, data were collected from 414 respondents who stayed at a mid-scale hotel within the past 24 months. The respondents’ perceived value (PV), perceived fairness (PF) and willingness to pay (WTP) for hotel rooms were examined with MANOVA and ANOVA tests to determine the effects of customer demographics on these variables. Findings Age, gender and marital status showed a significant effect on PV while age, gender and culture significantly affected PF. However, none of these variables significantly affected WTP. The culture of origin and the culture raised-in influenced PV, PF and WTP similarly. Originality/value This study reconciles several divergent results from previous studies and extends the scope of others by introducing different scenarios to each of the three dependent variables. To the best of the authors’ knowledge, it is also the first research study on this subject to evaluate more than two cultures and their effects on the independent variables.

Asymmetric demand responses to price changes are not an observable implication of classical demand theory, which predicts that consumers will react to a small price increase in much the same way as they do to a small price decrease. Yet applied researchers have long speculated that consumers are more sensitive to price increases than they are to price decreases. In addition, recent empirical studies generally support the theory of asymmetric demand responses. We construct a dynamic model based on data gathered from monthly telephone bills for 128 New York Telephone customers over a five-year period. Our results support the conclusion that customers react more quickly and strongly when prices go up than they do when prices go down.

The proportion of income spent on food has been in steady decline. Most people could readily pay more for food. Indeed, most consumers already pay more than necessary by buying specialized products or convenience foods. But there are costs associated with cheap food produced from animals that reach well beyond the dollars paid by citizens at the checkout register of a supermarket or fast-food restaurant. A morally significant effect of pressure for cheap food production has been modifications to production methods that may have effects on animal welfare (e.g., by decreased space allowances). Cheaper food for humans sometimes involves greater pain and suffering for food animals; however, improvements, possibly even major improvements, in welfare could be achieved with only small increases in price to the consumer. The obstacle to change is in part economic inertia; producers resist change because buyers expect low prices. Deployment of public subsidies and gradual change could avoid these short-term effects, although protection is needed against imports from countries with even lower welfare consideration and environmental standards. From the viewpoint of doing what is appropriate for animal welfare and the environment, free-market competition should no longer be the sole determinant of food prices. Animal scientists can serve the long-term interests of animal agriculture by combining efforts to do the right thing for the welfare of animals with more traditional goals, such as increasing production efficiency.

With slow economic growth following the 1990-91 recession and with small price increases, food spending rose to $617 billion in 1993 (table 1). This 3.7-percent increase is more than twice that of 1992. Food away from home led the increase, rising 5.5 percent in 1993, and food at home rose 2.2 percent. Adjusted for inflation, food spending per person rose 0.5 percent in 1993-food at home went down 1.2 percent and food away from home rose 2.5 percent- following 2 years of modest declines (table 2). As the Nation struggled out of the recession, personal food spending increased less than that for most other major categories of personal consumption, as is typical (table 3). Federal, State, and local governments paid for a slightly larger share of food in 1993, up 0.1 percent to 5.8 percent. Most of the increase was due to expanding Federal food assistance programs--notably food stamps, as participation increased with persistent unemployment. Price increases were modest-as they had been in 1992---due to ample supplies. Vigorous competition among food retailers and among restaurants helped moderate the price increases

A Bargain At Any Price? Child Care Costs and Women′s Employment

CEO Stock Options and Shareholder Return: Empirical Evidence from the UK

The past three and a half decades witnessed a distinctly declining trend in Singapore's unemployment rate, which dropped from an average annual rate of 7.85 percent in 1966-70 to 2.74 percent in 1991-2000. Kee and Hoon seek to identify and empirically examine the factors that have influenced Singapore's unemployment rate in an environment of low and stable inflation. They incorporate a union bargaining framework into a standard-factors trade model, in which an increase in the relative price or capital stock in the export sector raises the demand wage that firms can afford to pay relative to workers' fall-back income, and consequently lowers equilibrium unemployment. The magnitude of the effects depends on the fall-back income, the weight unions attach to employment, and the elasticity of labor demand, which the authors estimate using data on Singapore. The results show that labor unions in Singapore care more about employment than wages. Together with a small fall-back income and elastic labor demand, the authors show that given the same percentage change in relative export prices and capital accumulation in the export sector, the effect on unemployment is larger for the former. However, the empirical importance of capital accumulation in the export sector dominates increases in relative export prices in reducing unemployment since the manufacturing sector experienced a tremendous increase in capital inputs throughout the sample period, whereas the relative price of exports experienced a far smaller increase and only in the early part of the sample period. The authors conclude that through a very open trading regime, the tremendous increase in capital stock of the exporting sector has been the main reason behind Singapore's declining unemployment rate. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to study the effect of trade on growth.