No abstract

Whereas prices serve to allocate many resources in market economies, there remain vast reservoirs of unpriced resources to be managed. Business management and strategy concerns the creation, evaluation, manipulation, administration, and deployment of unpriced specialized scarce resource combinations. This paper applies the formalism of cooperative game theory to these concerns. In cooperative game theory, rents appear as the negotiated payments for the services of scarce valuable resources. The division of surplus is determined by the relative values created by different use combinations of resources. Within this framework, the strategy problem is clearly seen as one of discovering or estimating the value of various resource combinations. New wealth can be created by trade in resources as long as there are hitherto unexamined combinations.

We consider the problem of controlling M/M/c queuing systems. By providing a new definition of the time of transition, we enlarge the standard set of decision epochs and obtain a preferred version of the n-period problem in which the times between transitions are exponential random variables with constant parameter. Using this new device, we are able to utilize the inductive approach in a manner characteristic of inventory theory. The efficacy of the approach is demonstrated by successfully finding the form of an optimal policy for three distinct models that have appeared in the literature, namely, those of (i) Miller and Cramer, (ii) Crabill and Sabeti, and (iii) Low of particular note is our analysis of the Miller-Cramer model, in which we show that a policy optimal for all sufficiently small discount factors can be obtained from the usual average cost functional equation without recourse to further computation.

We consider a competitive version of the classical newsboy problem—in which a firm must choose an inventory or production level for a perishable good with random demand, and the optimal solution is a fractile of the demand distribution—and investigate the impact of competition upon industry inventory. A splitting rule specifies how initial industry demand is allocated among competing firms and how any excess demand is allocated among firms with remaining inventory. We examine the relation between equilibrium inventory levels and the splitting rule and provide conditions under which there is a unique equilibrium. Our most general result is that if all excess demand is reallocated, i.e., there is perfect substitutability, then competition never leads to a decrease in industry inventory.

we concentrate on the job market and, with the following exception, do not review empirical studies of search in other markets. Recent empirical work by Telser ( 1 975) suggests that search (for the lowest price) may be insignificant in markets where the marginal cost of search is small. The dispersion of the price distribution is also small in these markets. He notes that it pays sellers to reduce search cost via brand names and advertising.2 These search costs are quite low for the relatively standard commodities in his study (gasoline and fruit juices). However, "the same methods of reducing the marginal cost of search are not as effective for all commodities of which the most notable example is labor service." Unfortunately, only a modest amount of serious empirical testing of the job search hypotheses has been accomplished. On the other hand, there has been a considerable amount of casual empiricism, i.e., reinterpretation of well known economic phenomena within a job search setting. Much of the empirical work described here belongs to this second class.A unified theory of search would explain job search behavior over the life cycle. An individual would be traced from his career choice decision until he withdrew from the labor market either permanently (disability or retirement) or temporarily because of a favorable opportunity to consume leisure or a more rewarding household task. During periods of labor force participation, the individual's quit and layoff behavior and his pattern of unemployment would also be explained. The empirical relations between these life cycle search strategies and institutional arrangements like the minimum wage, the welfare system, unemployment insurance, the structure of retirement policies like Social Security and the tax system could be fruitfully studied.if c 2 c,, do not search (drop out); if c < c,, search (choose frictional unemployment).+ 4. This analysis can be generalized to explain individual choice among industries (occupations). Prior to search, the job searcher calculates t i , i = 0, I , . . . , n, for each of the n+l industries (occupations) where search is contemplated. He initiates search in that industry (occupation) with the highest 6 i . Here leisure is represented by occupation number 0.