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G. Feichtinger:
"Conspicuous Consumption in Recession Periods";
Talk: 31. ÖGOR - Jahrestag 2009 (Österreichische Gesellschaft für Operations Research), Karl-Franzens-Universität Graz (invited); 2009-10-23.

Recently, modeling discontinuities in economic development has gained interest. In parallel with the stock market turmoil, demand for fancy hotel rooms has plummeted. Facing a recession period in which the demand for conspicuous consumption goods is reduced, sales managers are pushed for aggressive discounting. Lower prices, however, reduce brand image and thus long-term demand. If capital markets do not function, how should a firm react to a recession period of uncertain duration and intensity to avoid bankruptcy?
A two-stage optimal control approach is presented to deal with this sort of situations. Mild, intermediate and severe recessions are compared. In several cases, optimal price policies turn out to be history-dependent. Generally, such 'tipping behavior' seems to be typical for occuring nonlinearities.

http://publik.tuwien.ac.at/files/PubDat_182835.pdf