Estimating the adoption of Bt eggplant in India: Who Benefits from public–private partnership?

The study analyzes ex ante the adoption of insect-resistant Bt eggplant technology in India. Farmers’ willingness to pay (WTP) is estimated using the contingent valuation method. Given the economic importance of insect pests in eggplant cultivation, the average WTP for Bt hybrids is more than four times the current price of conventional hybrid seeds. Since the private innovating firm has also shared its technology with the public sector, proprietary hybrids will likely get competition through public open-pollinated Bt varieties after a small time lag. This will reduce farmers’ WTP for Bt hybrids by about 35%, thus decreasing the scope for corporate pricing policies. Nonetheless, ample private profit potential remains. Analysis of factors influencing farmers’ adoption decisions demonstrates that public Bt varieties will particularly improve technology access for resource-poor eggplant producers. The results suggest that public–private partnership can be beneficial for all parties involved.     

Assessing holistic economic value for multifunctional agriculture in the US

This study used contingent valuation method to shed light on public preferences on the multifunctional roles of the US agriculture and to present a holistic estimate of the economic value of the nonmarket goods and services of US agriculture. Contingent valuation survey instrument was administered to a sample composed from the Ipsos web-based panel. Fishbein’s model of reasoned behavior and mediation hypothesis were combined to model the relationship between WTP (behavioral intentions) and sets of explanatory variables including attitudes, perceived attributes (about family farms, farmland preservation programs, government involvement in agricultural markets, and ecological state of our world), and socio-demographic profiles. Results show that, while exerting a highly significant impact on WTP, attitudes mediate the effects of the attribute variables on WTP: i.e., the attributes influence WTP directly as well as indirectly through attitudes. The estimated mean WTP was $515 per taxpayer annually. Aggregating individual WTPs across the US taxpayers above 20 years old produces $105 billion, representing a crude estimate of the economic value that the US consumers place on the multifunctional roles of US agriculture.     

Putting Your Money Where Your Mouth Is: The Value of Low Purchase Intention Consumers to Product Pricing

Hypothetical bias is a common research problem in measuring intentions. This study examines differences in individuals' hypothetical and nonhypothetical willingness to pay (WTP) based on purchase intention level. The purpose of Study 1 is to see if hypothetical bias is affecting all groups of individuals when segmented by purchase intentions. The contingent valuation method (CVM) was used to assess to individuals' purchase intentions and hypothetical WTP for an environmentally friendly (EF) offering. Individuals then participated in an auction that required them to bid on the same offering, thus requiring an actual monetary commitment. Through segmenting individuals into three purchase intention groups (high, moderate, and low), WTP biases were found to be positively related to stated intention level. High and moderate purchase intenders significantly overstated their hypothetical WTP. However, low purchase intenders did not. Further, no significant differences existed in nonhypothetical WTP between the three groups. The price that low purchase intenders were willing to pay through the CVM represented closely what they and the rest of the market were willing to pay in practice. The purpose of Study 2 was to examine several reasons why higher purchase intenders may be overstating their hypothetical WTP, with normative pressure and social desirability bias taken into consideration. Individuals indicated their purchase intentions and hypothetical WTP for an EF and a non‐EF product, and then participated in an auction. The higher purchase intenders again overstated their actual WTP for both products, whereas low purchase intenders did not. Results suggest that both normative pressure and social desirability bias contribute to hypothetical bias for products that carry a normative dimension (EF products). Controlling for these two factors eliminated the differences between hypothetical and nonhypothetical WTP. For products that did not have a normative component (non‐EF products), controlling for social desirability eliminated the gap between the hypothetical and nonhypothetical WTP amounts. A main implication from this research is that hypothetical bias is not a universal phenomenon and does not operate equally in all groups of purchase intenders. Marketers may want to consider only using lower purchase intenders in their pricing estimates for new products, especially for those that carry a normative component. Further, the CVM has received much criticism for measuring hypothetical WTP. However, estimates produced by the CVM were nearly exact for the low purchase intender group and were reliable when controlling for social desirability bias and normative pressure for the higher purchase intenders.     

Inconvenience cost of mobile communication failure: The case of South Korea

Mobile communication failure can occur when mobile traffic exceeds the manageable level. This depends on frequency bandwidth. Mobile communication failure causes inconveniences in a user's daily life that lead to social and economic damage. To address this issue, mobile telecommunications companies deploy additional bandwidths and develop new technologies, but these are costly strategies. This study applies a spike model based on a contingent valuation method (CVM) to measure the inconvenience cost resulting from mobile communication failure. The mean monthly willingness-to-pay (WTP) to avoid communication failure per user is estimated to be KRW 898.14 (USD 0.80) over a period of five years in our study. The inconvenience cost borne by the population is estimated to be KRW 2.97 trillion (USD 2.61 billion). Users experiencing greater frequency of communication failure are found to be willing to pay more to avoid the inconvenience. When excluding respondents citing zero-WTP, the mean WTP per user was calculated to be KRW 3426.41 (USD 3.01). Data traffic usage and frequency at which communication failure is experienced are variables that exhibit statistically significant effects on WTP to avoid mobile communication failure. Overall, estimation results show that a price discrimination based on data traffic usage or quality can be considered by mobile telecommunications companies and regulators to address the issue of data traffic inducing mobile communication failure.     

Value Creation by Toolkits for User Innovation and Design: The Case of the Watch Market

This study analyzes the value created by so-called "toolkits for user innovation and design," a new method of integrating customers into new product development and design. Toolkits allow customers to create their own product, which in turn is produced by the manufacturer. In the present study, questions asked were (1) if customers actually make use of the solution space offered by toolkits, and, if so, (2) how much value the self-design actually creates. In this study, a relatively simple, design-focused toolkit was used for a set of four experiments with a total of 717 participants, 267 of whom actually created their own watches. The heterogeneity of the resulting design solutions was calculated using the entropy concept, and willingness to pay (WTP) was measured by the contingent valuation method and Vickrey auctions. Entropy coefficients showed that self-designed watches vary quite widely. On the other hand, significant patterns still are visible despite this high level of entropy, meaning that customer preferences are highly heterogeneous and diverse in style but not completely random. It also was found that consumers are willing to pay a considerable price premium. Their WTP for a self-designed watch exceeds the WTP for standard watches by far, even for the best-selling standard watches of the same technical quality. On average, a 100% value increment was found for watches designed by users with the help of the toolkit. Taken together, these findings suggest that the toolkit's ability to allow customers to customize products to suit their individual preferences creates value for them in a business-to-consumer (B2C) setting even when only a simple toolkit is employed. Alternative explanations, implications, and necessary future research are discussed.     

Consumer willingness to pay for traditional food products

Reflecting the growing interest from both consumers and policymakers, and building on recent developments in Willingness to Pay (WTP) methodologies, we evaluate consumer preferences for an archetypal traditional food product. Specifically we draw on stated preference data from a discrete choice experiment, considering the traditional Hungarian mangalitza salami. A WTP space specification of the generalized multinomial logit model is employed, which accounts for not only heterogeneity in preferences but also differences in the scale of the idiosyncratic error term. Results indicate that traditional food products can command a substantial premium, albeit contingent on effective quality certification, authentic product composition and effective choice of retail outlet. Promising consumer segments and policy implications are identified.     

An experimental investigation of valuation change due to commonality in vertical product line extension

Commonality in product line design refers to using identical product features or modules in multiple products. The use of commonality in product line extensions is a growing practice in many industries. We consider vertical product line extensions to lower- and higher-end products, and study the effects of identical feature levels on consumers' evaluation of original products. Using a between-subject experimental design, we examine the effect of commonality using the bicycle as the example product. This experiment is then extended to eight different service and manufactured products. Results show that in many cases identical feature levels increase the perceived similarity between original and extension products. This influences the valuation of original products: valuation of the original low-end product increases while valuation of the original high-end product decreases. However, the amount of valuation change is not necessarily the same for the original low- and high-end products. This valuation change occurs regardless of buyers' knowledge level of the product and is sometimes moderated by a large difference in a differentiated feature.
This study suggests the importance of accounting for the demand-side effect of commonality in product design decisions. Change in customers' valuation may call for an adjustment in price—the price of a high-end product may have to be lowered due to valuation discount, and the price of a low-end product could be raised to take advantage of valuation premium. This change in valuation does not occur for every feature in every product. Therefore, by properly selecting the features that are identical, a firm may be able to take advantage of valuation premium without sacrificing valuation discount and enjoy the economies of scale in manufacturing and logistics due to commonality.     

Hedonic Property Valuation Models: Are Subjective Measures of Neighborhood Amenities Needed?

Common applications of hedonic residential property valuation models have relied on proxy measures of neighborhood amenities rather than directly measured subjective evaluations. While this approach simplifies data collection, there is reason to suspect that the use of proxy measures has degraded the accuracy of hedonic valuation models. The extent to which the use of proxy measures may decrease predictive accuracy, and fail to capture the effect of neighborhood amenities, has not been reported previously. The results presented here show that direct subjective measures yield only modest improvements in price prediction. Careful use of proxy measures for neighborhood amenities appears to be cost efficient for large-scale appraisal work.     

The effect of online shopping channels on brand choice,product exploration and price elasticities

This paper analyzes the effect of an online shopping channel on private label purchases, product exploration and price elasticities. Variation in the timing that an online shopping service was introduced is utilized as a source of exogenous variation in the decision to shop online. Event study estimates indicate a 0.3 to 1.0 (1.0 to 2.0) percent increase (reduction) in the proportion of private label (new) products purchased after the introduction of the online shopping service. Price elasticities are then estimated utilizing an Exact Affine Stone Index (EASI) demand model. Comparisons of in-store and multichannel price elasticities indicate that households are, on average, less price sensitive when shopping across both the in-store and online channels. Own-price (cross-price) elasticities are 1.07 (5.56) times larger in-store than they are in a multichannel setting. These findings suggest that retailers manipulate the online search platform and(or) the provision of substitutes to favor private label products, which have a higher margin. Additionally, these results suggest that retailers may find it profit maximizing to raise prices as consumer baskets become more sticky in the multichannel purchasing regime.     

Pricing of related products by a multiproduct monopolist

This paper examines the pricing behavior of a multiproduct monopolist (MPM). For a firm selling two products, the profit maximizing price of a particular item is found to depend upon its marginal cost, the own and cross-price elasticities and the budget shares of both products. Conditions are identified under which the price charged by a MPM will be greater than, less than, and equal to the price charged by an otherwise identical single product monopolist as well as the circumstances under which it is profitable for a MPM to utilize one product as a loss leader.     

How can new ventures command a price premium with innovations in emerging markets?

Successful financing is critical for new ventures' survival and future sustainable growth. With the unique institutional characteristics, it is especially difficult for new ventures in emerging economies to transform innovation capital into favorable investor responses (such as willingness-to-pay, WTP) during the process of initial public offerings (IPOs). Based on the patent records from a unique sample of Chinese firms, we demonstrate that new ventures can successfully leverage innovation for higher WTP in IPOs contingent on the existence of venture capital ownership and reputable underwriter endorsements. These financial intermediates can send inside-out and outside-in signals to market investors to reduce information asymmetry. Our study contributes to research on the valuation of innovations in IPOs. We also provide practical implications to managers and investors of new ventures. We provide implication to managers and investors of new ventures on how to increase the benefits from innovations, which fosters national economic growth and social welfare.     

Demand for ecolabeled seafood in the Japanese market: A conjoint analysis of the impact of information and interaction with other labels

The use of seafood ecolabels is expanding in the world marketplace, but so are labels indicating other product attributes, such as country of origin and wild vs. farmed. The interactive effects of these labels and attributes in evaluating consumers’ preferences for ecolabeled seafood are relatively unexplored. In this paper we investigate (1) the direct and interactive effects of seafood ecolabels with other common fish labels, and (2) how consumers’ perceptions about the state of marine stocks and the valuation of ecolabels may be affected by different information. We find moderate interactive effects between ecolabels and country of origin labels, whereas the valuation for seafood ecolabels is fairly high. In terms of information, we find that consumers’ perceptions about fish stock levels changed (negatively) after receiving information on declining stock levels, and more sensationalized information led to increased change. However, valuation for a seafood ecolabel increases only when the information was perceived positively (credible/interesting); whereas exaggerated information (which was also perceived less credible) had insignificant effects on WTP.     

The Value of Employer-Sponsored Child Care to Employees

This article uses the contingent valuation method for calculating the value of employer-sponsored child care to employees. Like many environmental amenities, there may be a nonuse or existence value of working for a company that offers employer-sponsored child care (ESCC), as well as a use value to parents who have children in the center. We test this hypothesis using data from three firms, two of which have on-site child care. Our findings indicate that price is a determinant of willingness to pay for the continued existence or establishment of an on-site center. We find evidence of the existence value, even for employees without young children, and a greater valuation among recent hires than among longer-term employees.     

Willingness-to-pay for natural,organic, and conventional foods: The effects of information and meaningful labels

Vague food labels and distorted product claims have persisted in the “natural” food industry, while organic claims can be certified by the U.S. Department of Agriculture (USDA). Using experimental methods and a sample of randomly selected subjects, we test food label and information treatment effects on subjects' willingness-to-pay (WTP) for organic, “natural,” and conventional foods. Random nth-price auctions are used to elicit WTP after subjects received one of five randomly assigned information treatments. We find large information effects, including asymmetric cross-market effects for natural and organic foods. Perhaps surprising is that organic premiums increase in response to subjects seeing the “natural” foods industry's perspective on its products. Demographics effects are also important. The results have practical implications for natural and organic food marketing and valuing products where there are vague claims about their attributes.     

Reverse Price Discrimination with Bayesian Buyers

This paper studies price discrimination under the situation in which buyers' prior valuations are initially observable by a seller but buyers receive further information about a product or service which remains private thereafter. The buyers interpret new information via Bayes' rule. We show that, in this environment, prices are not monotone in buyers' prior valuations. Interestingly, this results in the possibility that a seller intentionally offers a higher price to a low valuation buyer rather than a high valuation buyer (Reverse Price Discrimination). We derive this result in both monopoly and duopoly markets.     

Optimal exploration investments under price and geological‐technical uncertainty: a real options model

This article develops a real options model for valuing natural resource exploration investments (e.g. oil or copper) when there is joint price and geological‐technical uncertainty. After a successful several‐stage exploration phase, there is a development investment and an extraction phase. All phases are optimized contingent on price and geological‐technical uncertainty.
Several real options are considered. There are flexible investment schedules for all exploration stages and a timing option for the development investment. Once the mine is developed, there are closure, opening and abandonment options for the extraction phase. Our model maintains a relatively simple valuation structure by collapsing price and geological‐technical uncertainty into a one‐factor model.
We apply the model to a copper exploration prospect and find that a significant fraction of total project value is due to the operational, development and exploration options available to project managers.     

Relationship factors and firms' willingness-to-pay: A comparison of east-west settings

The aim of this study is to examine the underlying mechanism that explains the effects of supplier firms' sustained competitive advantage (SCA) on customer firms' willingness-to-pay a price premium (WTP) across Eastern and Western settings. Drawing upon the relationship marketing (RM) paradigm, we posit that SCA influences WTP via calculative commitment and relationship quality (RQ). A survey involving executives from Australian (n = 336) and Chinese (n = 360) firms was conducted to test the theoretical model. The findings reveal that the effect of SCA on WTP is mediated by RQ and calculative commitment among Chinese firms. Among Australian firms, however, the effect of SCA on WTP is mediated only by RQ and not calculative commitment. The study contributes to the literature by distinguishing the role of ‘rational’ (i.e., calculative commitment) and ‘emotional’ (i.e., affective commitment and RQ) relationship factors in influencing WTP, and by validating a multidimensional RQ model that is applicable to culturally diverse contexts. To marketing practitioners, this research helps to identify the conditions under which RM practices can be effective for B2B firms that operate across diverse cultures.     

纵向研发合作中的投资决策与甄别合同设计

纵向研发合作中,研发产品的收益类型为开发单位的私有信息。本文考虑纵向研发合作中研究单位的单边合作性投资激励问题,建立了信息不对称时的投资决策模型,为研究单位设计了一个根据收益类型的先验概率制定相应的投资策略的信息甄别合同。研究结果表明：信息不对称导致研究单位的投资积极性降低,且投资水平随着风险率递减;当研发产品的收益类型增加或者开发单位的保留收益水平降低时,信息不对称导致的研发合作效率降低程度减少。为了缓解信息不对称导致的投资不足问题,结合信息披露和期权理论设计了一个退出权合同。     

Energiewende und Übertragungsnetzausbau: Sind Erdkabel ein Instrument zur Steigerung der gesellschaftlichen Akzeptanz des Leitungsbaus? Eine empirische Untersuchung auf Basis der Kontingenten Bewertungsmethode

Transmission network development has led to protests throughout Germany. Many studies present underground cables as a means to increase public agreement to transmission line construction and network development. This paper verifies this thesis analyzing the willingness-to-pay of private households for underground cable employment, which allows for a distinct analysis of strategic behavior and opportunity costs that is omitted in classic questionnaire designs. The results of a contingent valuation study conducted in November and December 2012 in four regions of Germany, which are affected by transmission line development in different ways, are presented. At first glance, an analysis of 1.003 household responses confirms common findings with a majority of households favoring underground cables (about 60 %), albeit preferences vary strongly between sample regions. Willingness-to-pay, however, relativizes this result. A near share of 50 % of households voting for underground cables is not willing to accept an increase in electricity prices to finance respective projects (free riders). The fact that positive willingness-to-pay does not correlate positively with increasing lengths of underground cables in 60 % of cases underlines that underground cables are not supported unconditionally. All-in-all, a flat public approval of underground cable technology cannot be presumed based on WTP-evaluation. Preferences about underground cables and corresponding WTP are explained with demographic characteristics and attitudes using regression models. Fundamental thoughts on energy- and environmental policies do not serve to explain responses. Instead, regional factors and subjective opinions on how to finance such kind of infrastructure measures influence preferences for underground cables.     

Dark Fiber Valuation

Valuation of dark fiber has recently generated controversy, sparked particularly by the large sums booked for swaps of dark fiber between companies. One of the issues raised is valuation: i.e., what is the value of an asset that generates no revenue now and may do so at some unknown point in the future but only after investment, in an uncertain business climate, and where prices are dropping? The picture is further complicated because the result of investing to bring the asset to market (i.e. lighting the fiber) changes the supply and demand conditions of the market itself and hence invalidates price predictions. A realistic and consistent valuation methodology is necessary for increasingly cautious companies, auditors, and investors. In this paper we describe such a valuation methodology for dark fibre based on real options. Publicly available bandwidth price services start to make this practical by providing market price information. For dark fibre valuation the real option to be valued are the lighting decisions. We specifically include the effect on the market of adding new capacity by using the price-elasticity of demand within the stochastic price process itself, conditional on lighting decisions. Prices are generally volatile and decreasing with time. The evolution of lighting costs and maintenance are included in the valuation. The real options technique used here is novel in that it combines economic and market factors explicitly with mathematical finance to arrive at a valuation and optimal decisions. We found that the optimal lighting riming and capacity decisions to depend on many of the factors included in the analysis with no simple triggers: the details really matter.