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How well does the “Law of One Price” operate across countries? Interest in this question has been stimulated by the Monetary Aproach to the Balance of Payments (Frenkel and Johnson (1975)) which uses the law to determine the price of traded goods in open economies.

The authors use laboratory experiments to test two self-assessment tax mechanisms for facilitating land assembly. One mechanism is incentive compatible with a complex tax function, while the other uses a flat tax rate to mitigate implementation concerns. Sellers publicly declare a price for their land. Overstating its true value is penalized by using the declared price to assess a property tax; understating its value is penalized by allowing developers to buy the property at the declared price. The authors find that both mechanisms increase the rate of land assembly and gains from trade relative to a control in which sellers’ price declarations have no effect on their taxes. However, these effects are statistically insignificant or transitory. The assembly rates in our self-assessment treatments are markedly higher than those of prior experimental studies in which the buyer faces bargaining frictions, such as costly delay or capital constraints.

The purpose of this paper is to investigate the pricing strategy and the impact of agents' risk preference in a dual-channel supply chain in which both agents are risk-averse.

The authors make use of the mean-variance (MV) method to measure the risk aversion of the agents and apply Stackelberg game to obtain the optimal strategies of the proposed models. Furthermore, the authors compare the optimal strategies with that in the benchmark model in which no agent is risk-averse.

The authors find that the pricing decisions can be divided into four categories according to the risk attitudes of the agents: the decisions that are independent of two agents' risk attitudes, the decisions that depend on only one agent’s risk attitude (i.e. depend on only manufacturer's risk attitude and depend on only retailer's risk attitude) and the decisions that depend on both agents' risk attitudes. In addition, the authors find that the retail price will be lower and the wholesale price in most cases will be lower than that in the benchmark when at least one agent's risk control is effective; the demand will be always increasing as long as one agent's risk control is effective. Furthermore, compared to the benchmark, a win-win strategy (i.e. Pareto improvement) for the supply chain members can be obtained in a certain range where the agents' risk controls are appropriate.

This research provides a theoretical reference for the managers to make the pricing decisions and the risk control in dual-channel supply chains with heterogeneous preference consumers.

The purpose of this paper is to investigate the real effects of primary and secondary equity markets on the post-issue operating performance of initial public offering (IPO) firms.

The author utilizes the intended use of proceeds as a proxy variable for the primary market and the investment-to-price sensitivity and the informativeness of stock prices as alternative proxy variables for the secondary market. The compositional data, and non-parametric quantile regressions which are more robust to outliers than standard least square regressions, are employed for Indonesian equity market over the period of 1999-2013.

While confirming that firm operating performance can be explained by the firm’s motivation to go public, the author also shows that the operating performance is positively affected by investment-to-price sensitivity and negatively affected by stock price informativeness. The stock prices affect investment decisions by the way that the more liquid a stock is, the more informative its price is, and the more relevant stock prices are in investment decisions. These findings still hold after controlling for ownership structure.

Departing from the existing literature, the author investigates the role of primary and secondary equity markets for firm performance in an integrated framework because both markets interact closely in reality. The author shows that public listed firms can benefit both from the capital-raising function of the primary market and from the informational role of the stock prices of the secondary market. A measure of stock price informativeness, 1−R², however, must be understood in the context of thin trading in the sense that the level of liquidity affects the level of stock price informativeness.

This case describes the challenges faced by Amul in organising dairy farmers into a co-operative and creating continuous opportunities for value addition. Participants in the case discussion are required to review the developments in the organisation and recommend a strategy for the future.

Pay-what-you-want (PWYW) is a pricing strategy implemented in a variety of settings like supermarkets and museums, in which consumers determine the price they are willing to pay for a product or service based on their perceived utility. The authors propose an analytical model to investigate the impact of PWYW delivery pricing on the online food delivery (OFD) platforms.

Using a game-theoretic model, the authors characterize the equilibrium as a function of the platform's average delivery cost and the consumer's social preferences parameters like fairness and reciprocity. The authors derive the parametric conditions under which PWYW generates higher profits for the platform compared to the traditional pay-as-asked delivery pricing.

For the PWYW strategy to be profitable, the average delivery cost to the platform should be low. Therefore, OFD platform managers should focus on reducing delivery costs. The authors also identify the feasible region in which the platform managers need to maintain the consumer's social preferences.

Under PWYW, the authors recommend that the platform managers impose a minimum delivery fee which consumers can use as a benchmark to minimize zero delivery fee payments and consumers' free-riding tendencies simultaneously. This allows OFD platforms to extract online orders from highly price-conscious consumers.

This is one of the first studies to explore the innovative application of PWYW to a particular segment of delivery pricing in OFD platforms. The authors establish that the overall consumer surplus and social welfare are higher under the PWYW strategy, forming a solid ground for its implementation in OFD platforms.

In his review of 30 years of research in Prospect Theory, Barberis (2013) notes that support for Prospect Theory had come mainly from the laboratory. In this paper, I write about a recurring phenomenon in real life that is consistent with Prospect Theory predictions in decision-making loss domain. The 60 cases noted in this paper are associated with specific risk seekers that had cost more than $140 billion (an average of $2.33 billion per case). Given space consider– ations, I provide synopses for 14 cases. A few of these cases have been discussed in the extant literature in connection with internal control, but were not considered from the perspective of Prospect Theory. It is striking that these cases are costly, all participants are young men, and almost all had followed the gambler’s martingale strategy – i.e., double down. While these cases are informative about risk-seeking behavior, they are not sufficiently systematic to be subjected to stylized archival research methods.

Intermediary firms are economic agents that purchase from mostly small and numerous independent producers and sell to other firms or to the public. This article investigated how intermediary firms can optimally determine both selling quantity and purchasing price of a product. By incorporating the special structure of intermediary firms′ environments and by modifying the conventional economic order quantity (EOQ) model accordingly, we provide optimal decision rules regarding the selling quantity and purchasing price for intermediary firms under profit maximisation.

This study proposes a framework based on salience theory and shows that focusing on one type of risk (idiosyncratic or systemic) can explain overpricing of securities ex ante, and resales at low prices during crisis periods.

The author consider an overlapping generations (OLG) model where each generation lives for two periods and there is no population growth. Agents (investors) start their lives with an endowment W > 0 and have mean-variance utility. They invest their endowment when young and consume when old. Each period, the young investors optimally choose their portfolio from different risky assets acquired from the old generation, all assumed to be in fixed supply.

The author show that investor salience bias can explain excess volatility of asset prices and the resulting fire-sales in periods of financial turmoil. A change in salience – from one component (idiosyncratic) to the other (systemic) – will generate excess volatility. Interestingly, higher risk aversion generally exacerbates the excess volatility of prices. Moreover, the model predicts that if a big systemic shock hits the financial system, due to salience bias the price of systemic assets falls sharply. This relates to the observed fire-sales of assets during the global financial crisis.

The proposed model and results suggest that there may be a scope for intervention in financial markets during turbulences. In terms of ex ante policies the study suggests that investors and regulator should use better risk assessment technologies.

This is the first study constructing a tractable model based on the argument that investor salience may exacerbate the excess volatility of prices during financial downturns. The author relate salience to two types of risk; idiosyncratic and systemic and assume that investors' risk perception is biased towards the type of risk that is currently salient based on prior beliefs or past data. The author show that the diversification fallacy of the precrisis period, where seemingly safe assets were overpriced, can be explained by agents overweighing idiosyncratic risk and ignoring systemic risk.

South Africa’s wool industry plays an important role in the agricultural sector. The wool industry provides a valuable source of income for farmers who practice sustainable farming practices. However, wool farmers face numerous challenges, such as wool contamination, dirty wool and producing good-quality wool. Good-quality wool is determined by fibre diameter, clean yield, vegetable matter and staple length. This study aims to address these challenges.

A multiple regression analysis of price (R/kg) of White wool and Merino wool was applied to four variables fibre diameter: vegetable matter, clean yield and staple length. The analysis was based on the data for the 2009–2019 data from Cape Wools auctions.

Fibre diameter, clean yield and staple length, with exception of vegetable matter, made a statistically significant contribution to the determination of wool price after all other independent variables were controlled for (p < 0.05). A one-unit (micron) increase in fibre diameter resulted in a 0.404-unit decrease in wool price (R/kg). A one-unit (mm) increase in staple length resulted in a 0.022-unit increase in wool price (R/kg). There was no statistically significant association between vegetable matter and wool price. A one-unit increase in clean yield was associated with a 0.111-unit increase in wool price (R/kg).

Since wool fleeces consist of the largest portion of wool shorn from sheep, it is important for wool farmers to focus on wool with low fibre diameter, high clean yield percentage, low percentage of vegetable matter content and good length of the wool.

Since wool fleeces consist of the largest portion of wool shorn from sheep, it is important for wool farmers to focus on wool with low fibre diameter, high clean yield percentage, low percentage of vegetable matter content and good length of the wool.

In a developing country such as South Africa, this study is important for the following reason. It is understanding the wool characteristics that have the most significance influence on the determination of wool price for Merino wool and White wool might effectively help the wool farmers to adapt their production systems to improve the wool characteristics that determine wool price.

This study identified a need for a study to be conducted on all wool classes.