Effects of regulatory delays and uncertainty on pricing decisions |
| |
Authors: | F Aminzadeh S D Chikte |
| |
Institution: | (1) Unocal Science and Technology Division, Unocal Corporation, P.O. Box 76, 92621 Brea, California, USA;(2) Bell Communications Research, 331 Newman Springs Road, 07701 Red Bank, New Jersey, USA |
| |
Abstract: | In this paper we introduce a simple decision rule that a single product firm may use for filing for a price change to offset variations of the marginal cost. We consider a regulatory body whose response to the price change request involves a time delay with an exponential distribution. Two possibilities regarding the response of the regulatory body are considered. In one case it is assumed to be a binary approval process in which the rate adjustment is either approved in its entirety or rejected. In the second case we consider a partial approval process with a more general distribution. Decision rules for each case are developed. Finally we derive a multi-stage decision rule in which filing decisions are continuously updated based on temporal variations of the cost function. The multi-stage pricing decision model assumes that marginal cost escalation satisfies a Markovian jump process.This work was completed while the authors were with Bell Laboratories, USA. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|