A theory of multihoming in rideshare competition

We examine competition among ridesharing platforms, where firms compete on both price and the wait time induced with idled drivers. We show that when consumers are the only agents who multihome, idleness is lower in duopoly than when consumers face a monopoly ridesharing platform. When drivers and consumers multihome, idleness further falls to zero as it involves costs for each platform that are appropriated, in part, by their rival. Interestingly, socially superior outcomes may involve monopoly or competition under various multihoming regimes, depending on the density of the city, and the relative costs of idleness versus consumer disutility of waiting.     

The effect of market orientation on product innovation

Numerous scholars have debated whether marketing fosters or stifles innovation. The discussions, however, have been inconclusive due to limited empirical evidence. The authors investigate the relationship between two focal constructs in the debate: market orientation and product innovation. On the basis of a sample of U.S. manufacturing companies, the authors’ analysis shows that product innovation varies with market orientation. Specifically, (1) customer orientation increases the introduction of new-to-the-world products and reduces the launching of me-too products, (2) competitor orientation increases the introduction of me-too products and reduces the launching of line extensions and new-to-the-world products, and (3) interfunctional coordination increases the launching of line extensions and reduces the introduction of me-too products. Bryan A. Lukas is a senior lecturer in marketing at the University of Melbourne, Australia. His research interests are in the areas of strategic marketing and strategic innovation. His publications have appeared in theJournal of Business Research and other journals. Two conference papers have received recognition from the American Marketing Association. O. C. Ferrell is a professor of marketing at Colorado State University. He has served as president of the Academic Council of the American Marketing Association and is a fellow of the Society for Marketing Advances and Southwest Marketing Association. His publications have appeared in theJournal of Marketing, theJournal of Marketing Research theJournal of the Academy of Marketing Science, theJournal of Public Policy & Marketing, theJournal of Business Research, as well as others. He has co-authored 17 books and more than 100 articles and proceedings’ publications. He has worked as a consultant with organizations such as General Motors, Emerson Electric, and the Water Quality Association.     

Disruption of a Managed Competition Environment by Low-Ball Premium Bids

Abstract

This paper reviews the movement among multiple health plan options between 1994 and 1998 for Minnesota state employees whose work site was located in the Minneapolis/St. Paul metropolitan area. During this period the employer contribution was based on the lowest family premium bid from a qualified plan in the county of the employee’s work site. In 1995 the largest individual practice association model HMO in the state, Medica, reduced its state premium by 25%, becoming the lowest-priced option. This resulted in massive transfers of enrollees between plans. The point of this study was to estimate the risk changes that resulted from these movements between plan options. We obtained enrollment data by age and gender from Blue Cross Blue Shield of Minnesota (Blue Cross) and applied age/gender risk weight factors derived from actuarial rate tables to the Blue Cross cells. Annual changes in risk weights by 10-20% were common in a number of Blue Cross subpopulations, and in one case, by more than 50%.

The Blue Cross POS plan experienced increases in risk and went into a death spiral, while a second Blue Cross plan with a more restrictive provider network started with low risk, but experienced increases in risk when the Medica plan was withdrawn. Similar demographic data were not available from other plans offered by the state and claim costs were confidential, so the results pertain only to Blue Cross risks. The question is raised as to whether managed competition can work without some means of adjusting premium rates to the expected cost level of the enrollees of a particular health plan. All carriers seemed reluctant to guarantee premium rates after the 1994-1998 experience, and the state soon became self-insured.     

Short-sale constraints and price bubbles

Miller (1977) demonstrated that if investors have heterogeneous beliefs and short sales are restricted, trade of a security will disproportionately reflect positive information, generating a price bubble. As this intuition applies most relevantly to short intervals of trade, a question arises as to the longevity of such a bubble. In this paper, I argue that a bubble effected by short-sale constraints persists only if agents cannot distinguish between order flow caused by positive information or order flow caused by the constraints. If the constraint is common knowledge, it should have no effect on the long-term pricing of the stock. If, however, the constraint is random and unknown, a price bubble may form.     

The Impact of National Culture on Software Piracy

This paper examines the impact of the level of economic development, income inequality, and five cultural variables on the rate of software piracy at the country level. The study finds that software piracy is significantly correlated to GNP per capita, income inequality, and individualism. Implications for anti-piracy programs and suggestions for future research are developed.     

Patent Infringement: Lessons from Industrial Economics

Once a patent is found to have been infringed the law generally entitles the patentholder to monetary losses suffered as the result of the illegal conduct. It is shown here that there are important differences between the losses awarded under U.S. case law and those that economic models of competition indicate would allow patentholders to just capture the social value of their innovations and, with that, provide private incentives for efficient levels of innovation. The prevailing case law generally overestimates the harm, providing an incentive for the patentholder to opportunistically claim infringement. In the end this increases the reward to innovation and encourages overinvestment. The record of the widely read State Industries vs. Mor-Flo Manufacturing Co. (883 F.2d 1573, Fed. Cir. 1989, cert. denied, 493 U.S. 1022, 1990) provides a case study.     

Role-Based Experiences, Media Perceptions, and Knowledge Transfer Success in Virtual Dyads

Knowledge transfer (KT) is the process through which one is affected by the experience of another. While many of the challenges of KT have been discussed in the literature (e.g., incentives, cognitive limitations), the challenge of KT in virtual settings has received limited attention. In this paper, our interest lies in exploring asymmetric KT where a sender has more knowledge about a topic than a receiver. We focus on a dyadic relationship between geographically dispersed sender and receiver units, supported by a multi-media technology environment. Drawing from the KT literature and Channel Expansion Theory, we specifically explore the evolution of and relationship between role-based experiences (e.g., with partner, topic, media) and media richness perceptions. Our results provide evidence that KT roles do matter relative to the acquisition of experiences and expansions in media richness perceptions. Despite some differences in acquired experiences, our results also suggest that KT partners converge in their perceptions of acquired experiences and evolve to shared (or congruent) perceptions of media richness. Finally, our results provide evidence that sender-receiver congruence in media richness perceptions influences KT success.     

The Effects of Market Concentration and Horizontal Mergers on Hospital Costs and Prices

Antitrust advocates believe that horizontal consolidation in hospital markets can reduce competition and increase prices while merger advocates believe it can benefit consumers by reducing service duplication. This study analyzed the market conditions, operating characteristics, and costs and prices of approximately 3500 short-term general hospitals (including 112 within-market-area mergers) from 1986 to 1994 to investigate the effects of market concentration, hospital mergers, and managed care penetration. The results show: a shift away from non-price competition toward price competition in health care markets; that this shift was fueled by increased market penetration by price-sensitive buyers; that horizontal hospital mergers produced average cost savings of approximately 5%, which were generally passed on to consumers as lower prices; that cost savings were generally greater for mergers of similar-size hospitals, with a higher degree of duplicative services, and with lower pre-merger occupancy rates; and some evidence that post-merger price reductions were smaller in less-competitive markets.     

An entrepreneurial critique of Georgism

This paper develops a critique of the single-tax proposal of Henry George. We present a simple search-theoretic model for the discovery of natural resources and show that a tax on the unimproved value of land is distortionary. We then consider the time inconsistency and regime uncertainty problem created by even incremental Georgist policy. We discuss historical cases of land reform and the subsequent challenge to re-establish a credible commitment to property rights in land and natural resources.