Falling through the cracks: International accounting rate reform at the ITU and WTO

Heightened attention to international accounting rates at the ITU and the WTO has led some observers to conclude that carriers soon will impose cost-based termination charges. This article concludes that while accounting rates have declined on some routes, many incumbent carriers can and will delay or thwart progress. The article examines the FCC's unilateral regulatory initiative as evidence of a growing schism between governments keen on immediate progress and those that fear a ‘free fall’ in accounting rates and a quick end to settlement surpluses. The article also considers technological innovations like call-back and Internet telephony with an eye toward assesssing whether and how widespread accounting rate reductions will occur.     

The mixed blessing of a deregulatory endpoint for the public switched telephone network

Receiving authority to dismantle the wireline public switched telephone network (PSTN) will deliver a mixture of financial benefits and costs to incumbent carriers and also jeopardize longstanding legislative and regulatory goals seeking ubiquitous, affordable and fully interconnected networks. Even if incumbent carriers continue to provide basic telephone services via wireless facilities, they will benefit from substantial relaxation of common carriage duties, no longer having to serve as the carrier of last resort and having the opportunity to decide whether and where to provide service. On the other hand, incumbent carriers may have underestimated the substantial financial and marketplace advantages they also will likely lose in the deregulatory process. Legislators and policy makers also may have underestimated the impact of no longer having the ability to impose common carrier mandates that require carriers to interconnect so that end users have complete access to network services regardless of location.This paper will identify the potential problems resulting from prospective decisions by National Regulatory Authorities (NRAs), such as the United States Federal Communications Commission (FCC), to grant authority for telecommunications service providers to discontinue PSTN services. The paper also will consider whether in the absence of common carrier duties, private carriers providing telephone services, including Voice over the Internet Protocol (VoIP), voluntarily will agree to interconnect their networks. The paper will examine three recent carrier interconnection issues with an eye toward assessing whether a largely unregulated marketplace will create incentives for carriers to interconnect networks so that consumers will have ubiquitous access to PSTN replacement and other broadband services.The paper concludes that private carrier interconnection models and information service regulatory oversight may not solve all disputes, or promote universal service public policy goals. Recent Internet interconnection and television program carriage disputes involving major players such as Comcast, Level 3, Fox, Cablevision and Google point to the possibility of increasingly contentious negotiations that could result in balkanized telecommunications networks with at least temporary blockages to desired content and services by some consumers.     

Airport congestion and capacity when carriers are asymmetric

This study investigates pricing and capacity investment for a congested airport served by multiple carriers. Removing the symmetric carrier assumption, when airlines’ market shares are potentially asymmetric, the socially non-discriminatory optimal charge rule should include an additional term that corrects the distortion caused by pricing itself. The first-best outcome cannot be achieved, and the airport overinvests under the non-discriminatory optimal charge. However, if the airport levies discriminatory charges respective to carriers, the first-best outcome can be achieved and capacity investment is socially efficient under discriminatory optimal charges. In addition, the discriminatory optimal charges levied on a carrier with a larger (smaller) market share are lower (higher).     

On the convexity of newsvendor games

This study considers a simple newsvendor situation that consists of n retailers, all selling the same item with common purchasing costs and common selling prices. Groups of retailers might increase their expected joint profit by inventory centralization, which means that they make a joint order to satisfy total future demand. The resulting newsvendor games are shown to have non-empty cores in the literature. This study investigates convexity of newsvendor games. We focus our analysis on the class of newsvendor games with independent symmetric unimodal demand distributions after providing several examples outside this class that are not convex. Several interesting subclasses, containing convex games only, are identified. Additionally, we illustrate that these results cannot be extended to all games in this class.     

传统品牌与网货品牌竞争下的多渠道供应链定价研究

基于传统制造商品牌的双渠道供应链,引入网货品牌的网络直销渠道,构建了两个品牌竞争下的多渠道供应链定价模型。并考虑了两条网络渠道的双重搭便车行为,通过Nash博弈得到供应链成员在分散和集中式决策下的均衡策略。研究表明各博弈方的最优定价和利润是关于渠道间及品牌间交叉价格弹性系数的增函数,且渠道竞争的影响显著于品牌竞争;两个制造商的搭便车行为与自身的最优定价和利润呈正相关,但它们的相互影响取决于直接价格弹性系数;搭便车行为对零售商是不利的。最后采用价格加成契约来协调多渠道供应链,以弥补分散决策下双重边际效应带来的损失。     

Coordination in retailer-carrier channels for long term planning

We study a retailer-carrier channel for the purpose of long term planning and coordination. Here, the term channel represents the business interaction between the retailer and the carrier. The retailer sells a particular item with price-dependent demand, whereas the carrier is responsible for transporting the item to the retailer's site. We characterize the profit functions of each channel member as well as the total channel profit. We consider two specific channel structures: (i) the centralized channel and (ii) the decentralized channel. Under the first channel structure, the goal is to set the retail price so as to maximize the total channel profit. Under the latter, the carrier and the retailer choose their own policy parameters, i.e., the freight rate for the carrier and the retail price for the retailer, so as to maximize their individual profits. We model the decentralized channel as a Stackelberg Game and propose a coordination mechanism between the retailer and the carrier in which the retailer signals a price multiplier to the carrier. We illustrate that this mechanism could provide win-win solutions for both parties and present analytical and numerical results on the efficiency of channel coordination. We demonstrate that coordination in retailer-carrier channels can be as promising as supplier-retailer channels. We also discuss the effects of retailer-carrier coordination on inventory levels.     

Monopoly power and the problem of CLEC access charges

The analysis in this paper considers the problem of excessive originating and terminating access charges imposed by some competitive local exchange carriers (CLECs) in the United States. The problem arises because the current institutional structure provides an incentive for CLECs to charge for access service in excess of what a competitive market would indicate. An examination of the data shows that the problem of excessive access charges imposed by CLECs is very real. An analysis of terminating access charges for September 2000 reveals that average terminating access charges billed to three interexchange carriers (IXCs) are excessive, exceeding average price cap regulated incumbent local exchange carrier (ILEC) access charges by 370–470 percent. Some solutions to the problem are offered including a first-best solution whereby the calling party would be required to pay for originating access service and have the receiving party pay for terminating access service. A second-best solution would be to limit CLEC's access charges to an IXC to be less than or equal to the access charges of the ILEC with which it directly competes for customers.     

Do Retailers Really Profit from Ambidextrous Managers? The Impact of Frontline Mechanisms on New and Existing Product Selling Performance

When manufacturers introduce a new product to the market, downstream retail partners are faced with inherent trade‐offs. Retail sales personnel have to support the new product's introduction with substantial sales efforts but also sell the existing products in stock, before storage and devaluation costs spin out of control. This study shows how retail sales managers can guide sales personnel's performance of new and existing product selling, respectively. The authors argue that a manager may prioritize selling new products, existing products, or both (i.e., have an ambidextrous selling orientation). Based on data gathered from sales representatives and company databases of a large European consumer electronics retailer, the authors perform a time‐lagged partial least squares analysis to test empirically their conceptual model. The authors find that ambidextrous sales managers outperform their singular‐oriented counterparts if they properly align their orientation with a frontline management mechanism consisting of task autonomy, performance feedback, and employee age. More specifically, ambidextrous managers promote net profit obtainment if they grant their sales employees task autonomy and give little performance feedback. In addition, a remarkable finding is that older sales agents tend to outperform their younger counterparts when working under an ambidextrous manager. The authors discuss the implications of these findings.     

Profiting from innovations: the role of new game strategies in the case of Lipitor of the US pharmaceutical industry

In exploring why innovators often do not profit from their innovations, researchers concentrate on innovators versus imitators and the extent to which owners of complementary assets capture profits from innovations. The literature provides scant attention to factors that sap profits from innovations. This paper argues that an innovator's positioning vis‐à‐vis customers, suppliers, complementors, and other co‐opetitors plays a critical role in the innovator's profitability. The article explores how an innovator can use new game strategies to better positioning, thus capturing rents from innovations and enabling further innovations in the future. The study examines the case of Lipitor, one of the world's best‐selling drug, to illustrate how positioning can play in a firm's ability to profit from its innovations.     

加拿大电力管理可鉴之处

介绍了加拿大电力事业有关情况.加拿大电力管理具有"政企分开、各省办电、公私结合、服务客户"的特点,市电力公司大部分为私营企业,自负盈亏.农电企业是民办私营,都是自主经营、自负盈亏、自我约束、自我发展的经济实体和市场经济竞争的主体.加拿大电力强调供电可靠性、依法管理和为用户服务.     

Positioning through B2B carrier signals: Understanding how service quality is communicated via websites

Today's marketplace requires B2B motor carriers to connect with shippers in salient ways. To accomplish this, B2B carriers communicate signals of service quality in order to position themselves uniquely from the competition. Signaling theory describes how inequity in information between parties is filled by sending signals to convey missing information (Spence, 1973). Signaling theory was used as a foundation to investigate information used by B2B carriers to signal service quality and create positioning strategies. Results of a content analysis of 490 B2B motor carrier websites for signals of 12 dimensions of service quality are used to develop a typology of U.S. B2B motor carriers. These are: Minimalist, User-Friendly, and Safety First. Associations with firm revenues, firm size, credit score, and number of NAICS codes used are discussed along with implications.     

The Effect of Sales Force Adoption on New Product Selling Performance

Although several studies have suggested that the sales force is a major contributing factor to new product success, few studies have focused on new product adoption by the sales force, particularly with respect to its relationship with selling performance. The present article presents empirical evidence on the impact of sales force adoption on selling performance. We defined sales force adoption as the combination of the degree to which salespeople accept and internalize the goals of the new product (i.e., commitment) and the extent to which they work hard to achieve those goals (i.e., effort). It was hypothesized that the impact of sales force adoption on selling performance will be contingent on supervisory factors (sales controls, internal marketing of the new product, training, trust, and supervisor's field attention), and market volatility. Therefore, this article also provides evidence of the conditions under which sales force adoption of a new product is more or less effective in engendering successful selling performance. The hypothesized relationships were tested with data provided by 97 high technology firms from The Netherlands. The results show that sales force adoption is positively related to selling performance. This finding suggests that salespeople who simultaneously exhibit commitment and effort will achieve higher levels of new product selling performance. Outcome based control, internal marketing and market volatility are also positively related to new product selling performance. The effect of sales force adoption on selling performance is stronger where outcome based control is used and where the firm provides information on the background of the new product to salespeople through internal marketing. Training and field attention weaken the adoption‐performance linkage. These findings may indicate that salespeople in The Netherlands interpret training as “micromanaging” and field attention as “looking over their shoulder.” We conclude with implications of our study for research and managerial practice.     

Concurrent pricing and lot sizing for make-to-order contract production

This paper develops a model for the simultaneous (i.e. concurrent) determination of the inventory and pricing policies of a supplier, which produces and supplies a product to a buyer, on the basis of a contractual agreement, calling for the delivery of a specific quantity periodically. Assuming that the customer is rational, i.e. it follows its own optimal purchasing policy, the objective of the supplier is to determine the product's selling price, in conjunction with an appropriate production/inventory policy, so that a predetermined gross profit level is achieved. It is further assumed that the supplier's production batch size is an integer multiple of the buyer's order quantity. In formulating a mathematical model of this situation, the interactions between the product's price, the buyer's economic order quantity and the supplier's selling price, costs and profit are taken into account. For solving this model, a simple iterative algorithm is proposed, which is illustrated through a numerical example. Sensitivity analysis performed on the model demonstrates that it is relatively robust and quite insensitive to errors in estimating the buyer's ordering to carrying cost ratio on the part of the producer.     

Convenient flight connections vs. airport congestion: Modeling the ‘rolling hub’

This paper provides the first analysis of the trade-off between convenient flight connections and airport congestion, a fundamental but untreated element in the economics of hub-and-spoke networks. A continuous spatial model illustrates this trade-off in a framework where a small gap between flight operating times raises congestion while also shortening a connecting passenger’s layover time. When the passenger’s cost per unit of layover time rises, the monopoly airline chooses to narrow the gap between its flights, yielding shorter layovers but more congestion. A discrete spatial model, where flights congest one another only if they operate in the same discrete period, makes this layover-cost effect discontinuous: the monopoly carrier concentrates (deconcentrates) its flights when this cost is high (low) relative to the costs of congestion. When fringe carriers are present, however, the hub carrier always concentrates its flights, either partially or fully. But the presence of a second hub carrier leads to an equilibrium mirroring the monopoly outcome: the carriers concentrate their flights in different periods when the layover cost is high and deconcentrate them otherwise. The paper also presents a welfare analysis, showing that movement from the equilibrium to the social optimum typically requires greater carrier separation.     

Buyer and seller perceptions of transportation purchasing variables

The study in this article involved the investigation of 15 carrier selection variables over three dimensions by three groups with high involvement in the purchasing decision—traffic managers, sales representatives, and sales managers. The primary focus of the study was the identification of significant differences in the assessment of importance of the technical abilities of a carrier, the service orientation of a carrier and the image of a carrier as perceived by sales managers and sales representatives representing the selling systems, and traffic managers representing the buying systems.     

Distinctive arrangements for international interconnection?

An issue of growing importance in telecommunications policy is the relationship between interconnection for domestic and international telephony. While international telephony's need for international transport is an inherent distinction, that factor will not determine distinctions in interconnection arrangements. Under the existing pricing structure for telephony, cross-border rent shifting is the key issue. Innovations in the pricing structure for telephony, whether through Internet telephony or other avenues, offer the potential for changing the structure of interconnection negotiations and eliminating distinctions between international and domestic telephony interconnection.     

Do low-quality products affect high-quality entry? Multiproduct firms and nonstop entry in airline markets

This paper studies the effect of product ownership and quality on nonstop entry in the airline industry. Specifically, this paper empirically examines the decision of an airline to offer high-quality nonstop service between cities given that the airline may or may not be offering lower quality one-stop service. I find that airlines that offer one-stop service through a hub are less likely to enter that same market with nonstop service than those that do not. In addition, the quality of the one-stop service is an important determinant of entry. Airlines are more likely to enter a market with nonstop service if their own or their rival's one-stop service in the market is of lower quality. Estimates suggest that the entry of a rival nonstop carrier diminishes the probability a carrier enters the market with nonstop service. However, airlines offering one-stop service respond differently to nonstop rivals. In particular, relative to other carriers, those offering one-stop service are more likely to enter markets if there are nonstop rivals, suggesting that cannibalization effects are diminished in the presence of nonstop competition.     

Joint pricing and inventory control for non-instantaneous deteriorating items with partial backlogging and time and price dependent demand

In this paper, a joint pricing and inventory control for non-instantaneous deteriorating items is developed. We adopt a price and time dependent demand function. Shortages is allowed and partially backlogged. The major objective is to determine the optimal selling price, the optimal replenishment schedule and the optimal order quantity simultaneously such that, the total profit is maximized. We first show that for any given selling price, optimal replenishment schedule exists and unique. Then, we show that the total profit is a concave function of price. Next, we present a simple algorithm to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.     

Toward international settlement reform: FCC benchmarks versus ITU rates

The global telecommunications service market is undergoing significant change as more countries privatize suppliers, liberalize national markets, and encourage entry. Despite these changes, international settlement rates remain significantly higher than the cost to terminate calls and many carriers reap substantial monopoly profits from the settlement payments they receive. Annual US settlement payments approximate $5 billion. Settlement rates are declining but the progress has been slow. High settlement rates, by raising the cost of international telephone service, result in high calling prices. To accelerate a reduction in settlement rates, the US Federal Communications Commission (FCC) adopted a set of maximum rates, called benchmark rates, which it expects US carriers to use in their settlements with other carriers and created a process designed to insure the implementation of these rates. The FCC benchmark rates vary primarily on the basis of a country's level of economic development. When the FCC took its action, the benchmark rates, which range from 15 to 23¢, were significantly below the rates in effect with most countries. The FCC action was widely criticized even though the rates exceed costs, vary according to countries’ levels of economic development, and will be phased in over five years to give countries time to adjust. The International Telecommunication Union (ITU) took an unprecedented step of proposing an alternative set of settlement rates for its members. The ITU rates differ significantly from the FCC rates, being much lower for economically advanced countries and significantly higher for less developed countries. The ITU rates vary according to a country's teledensity but the rationale for the ITU categories lacks support. In addition, other, arbitrary categories are part of the plan. Neither the FCC nor the ITU approach to reducing settlement rates address the problem of reforming the international settlement process and replacing it with an economically efficient, market oriented payment scheme. The first stage of the FCC policy went into effect in 1999. Complemented by changing market conditions, the policy has lead to lower US settlement rates, but most rates still exceed competitive market levels. Virtually all US minutes in the FCC's top two income categories comply with the prescribed benchmark rates. In fact, many countries in these two categories have rates with US carriers that are below benchmark levels. Several less developed countries have also negotiated rates with US carriers that conform to the FCC plan. As a result, US carriers benefit from the FCC policy as their average settlement costs decline. These cost reductions make possible lower calling prices but the market structure of US international communications service industry may inhibit the flow-through of these savings to US consumers. US consumer's prices were falling before the FCC acted on settlement rates. The FCC action seems to have increased the pressure to further reduce these rates. At the same time, however, service markets are being increasingly segmented and price discrimination is more widely practiced so only some US consumers benefit from lower settlement rates.