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Revenue management with forward and spot trading

Posted on:2010-04-01Degree:Ph.DType:Thesis
University:New York University, Graduate School of Business AdministrationCandidate:Popescu, Dana GFull Text:PDF
GTID:2449390002478382Subject:Business Administration
Abstract/Summary:
This thesis elaborates on aspects of the revenue management decisions of firms that sell both on a spot and a forward market and face uncertainty in consumer demand.;In Chapter 2 we illustrate a Cournot competition game between firms that have access to a forward market and are facing uncertain consumer demand on the spot market. We find that there always exists a symmetric equilibrium in this setting and give sufficient conditions for it to be unique. We then compute the equilibrium forward and spot quantities that are traded as well as the corresponding prices. We establish that the size of the forward market, in expectation, can be different from the one under deterministic demand, when there is high uncertainty in demand. Moreover, the quantity traded in the forward market can be either higher or lower than in the deterministic case.;In Chapter 3 we focused on a specific type of forward and spot transactions---advertising sales of cable television networks. We start with an empirical investigation of the factors that affect the negotiated plan prices and find that demographic is the major explanatory factor of plan prices. Based on the empirical findings, in the second part of the chapter we formulate a new model for allocating media advertising resources. The new aspect is that each ad spot generates a different number of impressions in different demographics. Consequently, each spot generates a different revenue depending on the target audience of the advertiser to whom it is sold. We propose several heuristics to solve the allocation problem.;In Chapter 4 we model forward premiums and discounts and illustrate how forward markets can be used as instruments of price discrimination. We show that there always exists a forward premium whenever the manufacturers with high willingness to pay have no uncertainty in demand and the manufacturers with low willingness to pay have stochastic demand.
Keywords/Search Tags:Spot, Forward, Revenue, Demand
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