Related Experiment Video
Updated: Jun 10, 2025
07:47
Measuring Delay Discounting in Humans Using an Adjusting Amount Task
Published on: January 9, 2016
15.3K
Desensitization to commodity price fluctuations by product characteristics
Keiji Sakakibara1, Daniel M Packwood2
1Graduate School of Advanced Integrated Studies in Human Survivability (GSAIS), <a href="https://ror.org/02kpeqv85">Kyoto University</a>, Kyoto 606-8306, Japan.
Physical Review. E
|October 19, 2024
Summary
Improved product characteristics can significantly reduce how commodity price changes affect product prices. This study models price dynamics, showing better features suppress price transmission for competing products.
Area of Science:
- Economics
- Materials Science
- Chemical Engineering
Background:
- Understanding the transmission of commodity price volatility to product prices is limited.
- Product pricing is influenced by commodity price fluctuations through consumer demand.
- Consumer choices depend on utility functions incorporating product characteristics.
Purpose of the Study:
- To develop a price dynamics model for a product competing with a commodity.
- To investigate how commodity price fluctuations transmit to product prices.
- To analyze the impact of product characteristics on this transmission.
Main Methods:
- A stochastic process models commodity prices.
- A demand function aggregates consumer choices based on a utility function.
- Numerical simulations are used to test the model's predictions.
- The model is applied to the case of monolayer platinum versus platinum metal catalysts.
Main Results:
- Improved product characteristics were shown to suppress the transmission of commodity price fluctuations.
- In the case of monolayer platinum, enhanced characteristics effectively eliminated product price fluctuations.
- The effect was observed within the considered consumer population regime.
Conclusions:
- Product characteristics play a crucial role in mitigating the impact of commodity price volatility on product prices.
- Even minor improvements in product characteristics can substantially decouple product prices from commodity price fluctuations.
- The developed model provides a framework for analyzing price dynamics in markets with competing products and commodities.
Related Concept Videos
01:20Desensitization and Tachyphylaxis
1.5K
Tachyphylaxis is described as a rapid decrease in response to a drug after repeated or continuous administration of the same drug dose. It is a phenomenon where the body becomes less responsive to a particular substance or intervention over time, requiring higher doses or stronger interventions to achieve the same effect. It results from adaptive changes in the body's receptors, signaling pathways, or physiological processes that occur in response to prolonged exposure to a stimulus.
1.5K
01:25The Anchoring-and-Adjustment Heuristic
7.2K
In order to make good decisions, we use our knowledge and our reasoning. Often, this knowledge and reasoning is sound and solid. However, sometimes, we are swayed by biases or by others manipulating a situation. For example, let’s say you and three friends wanted to rent a house and had a combined target budget of $1,600. The realtor shows you only very run-down houses for $1,600 and then shows you a very nice house for $2,000. Might you ask each person to pay more in rent to get the...
7.2K
02:52Predicting Products: Substitution vs. Elimination
11.4K
When a nucleophile and an alkyl halide react, nucleophilic substitution and β-elimination reactions compete to generate products.
The following factors can influence the mechanisms competing against each other:
The following factors can influence the mechanisms competing against each other:
11.4K
01:14Conditioned Taste Aversion
118
Conditioned taste aversion, also known as sauce béarnaise syndrome, is a phenomenon in which an individual develops an aversion to a certain food taste following a negative experience, typically illness. This form of aversion is a type of classical conditioning in which the taste of the food (conditioned stimulus, CS) is associated with the experience of illness (unconditioned stimulus, UCS).
A notable characteristic of conditioned taste aversion is that it often requires only a single...
A notable characteristic of conditioned taste aversion is that it often requires only a single...
118
01:21Plastic Behavior
189
A material's elastic behavior is characterized by the disappearance of stress once the load is removed, allowing the material to return to its original state. However, when stress surpasses the yield point, yielding commences, marking the onset of plastic deformation or permanent set. This change from elastic to plastic behavior is influenced by the peak stress value and the duration before the load is removed. An intriguing observation occurs when a specimen is loaded, unloaded, and...
189
01:09Decision Making: P-value Method
5.3K
The process of hypothesis testing based on the P-value method includes calculating the P- value using the sample data and interpreting it.
First, a specific claim about the population parameter is proposed. The claim is based on the research question and is stated in a simple form. Further, an opposing statement to the claim is also stated. These statements can act as null and alternative hypotheses: a null hypothesis would be a neutral statement while the alternative hypothesis can...
First, a specific claim about the population parameter is proposed. The claim is based on the research question and is stated in a simple form. Further, an opposing statement to the claim is also stated. These statements can act as null and alternative hypotheses: a null hypothesis would be a neutral statement while the alternative hypothesis can...
5.3K