Quality Competition, Insurance, and Consumer Choice in Health Care Markets

In this model, insurance offering a choice of hospitals is valued because consumers are uncertain which hospital they will prefer ex post. A competitive insurance market facilitates tacit price collusion between hospitals; high margins induce hospitals to compete for customers through overinvestment in quality. Incentives may exist to lock in market share via managed-care plans with less choice and lower prices. As technology becomes more expensive, the market increasingly offers too little choice. A pure managed care market may emerge, with underinvestment in quality. Relative to a pure insurance regime, however, all consumers are better off under managed care.     

房地产经纪服务模式比较研究——基于消费者视域

通过改进SERVQUA模型,利用联合分析方法比较了消费者对传统模式、美国MLS模式和新兴的互联网服务模式三种房地产经纪服务模式的偏好状况,并模拟了市场占有率。研究结果表明,消费者最看重房地产经纪服务的可靠性和价格,但价格偏好并不是越低越好。理想的服务产品兼具三种模式的特点,要满足消费者的需求,需要融合不同的服务模式,互相取长补短。从市场占有率模拟的结果来看,消费者更偏好美国的MLS模式,该模式可能会成为我国未来房地产经纪服务模式的主流。     

Learning in Advance Selling with Heterogeneous Consumers

Advance selling occurs when consumers order a firm's product prior to the regular selling season. It reduces uncertainty for both the firm and the buyers and enables the firm to better forecast its future demand. The distinctive feature of this paper is that there are both experienced and inexperienced consumers, with the former knowing their valuations of the product in advance. We show that pre‐orders from experienced consumers lead to a more precise forecast of future demand by the firm and that the optimal pre‐order price may be at a discount or a premium relative to the regular selling price. Copyright © 2016 John Wiley & Sons, Ltd.     

Exclusivity and Control

We model competition between content distributors (platforms) for content providers, and show that whether or not content is exclusive or “multihomes” depends crucially on whether or not content providers maintain control over their own pricing to consumers: if content providers sell their content outright and relinquish control, they will tend to be exclusive; on the other hand, if content providers maintain control and only “affiliate” with platforms, then multihoming is sustainable in equilibrium. We show that the outcome under affiliation depends on the tradeoff between platform rent extraction (which increases in exclusivity) and content rent extraction (which increases in multihoming), and demonstrate that the propensity for exclusivity can be increasing, decreasing, or even nonmonotonic in content quality. Finally, if a content provider internalizes the effect of its own price on platform demand, we prove that a platform that already has exclusive access to content may prefer to relinquish control over content pricing to the content provider in order to reduce price competition at the platform level.     

中国人从众消费行为问题探究——基于控制的视角

中国人消费行为中从众问题产生的重要原因之一在于,受本土社会取向文化影响,中国消费者在消费决策过程中偏好于借助以适应为焦点的选择次级控制策略来实现维护与周围他人、特定群体以及环境中其他特定因素之间和谐、融洽之关系的目标,因此其从众消费行为具有主动调整自我、积极适应的特征.与之相比,受个体主义文化影响,西方消费者偏好采用初级控制策略,其从众消费行为具有被动、消极适应的特征.随着社会的变迁与中国人自我意识的不断强化,中国年轻一代消费者的非从众意识在不断加强,但是中国文化与社会的社会导向特征的存在决定了次级控制策略仍是影响中国消费者行为的重要因素.     

Competing Environmental Labels

We study markets in which consumers prefer green products but cannot determine the environmental quality of any given firm's product on their own. A nongovernmental organization (NGO) can establish a voluntary standard and label products that comply with it. Alternatively, industry can create its own standard and label. We compare the stringency of these two types of labels, and study their strategic interaction when they coexist. We find that even with error‐free labels, environmental benefits may be smaller with two labels than with the NGO label alone, and we characterize when label competition is more likely to be environmentally beneficial.     

Sources of downward bias in estimating the demand income elasticity for urban housing

Housing demand studies, whether relying upon individual or grouped data, have limited their observations to similar housing units and/or similar housing consumers to help control for product heterogeneity. Yet similar housing units tend to locate in clusters; tenants tend to segregate by race and income. The unintended results may be: (1) for grouped data, selection of a product subgroup with a supply price elasticity small enough to matter; (2) for individual data, selection of a consumer subgroup possessing a lower income elasticity than all housing consumers. Evidence is given that the supply price elasticity is sometimes small enough to matter when grouped data are used.     

Resale price maintenance in a model of consumer search

A retail search model of Salop and Stiglitz (1977) is adapted to analyze manufacturer incentives for resale price maintenance. For some retailer cost functions and distributions of consumer search costs, imposition of a minimum price for retailers causes a price distribution to collapse to an intermediate price. Manufacturers may benefit from price floors when sales to high-search-cost consumers that have obtained lower prices increase sufficiently so as to offset decreased sales to other consumers facing higher prices. In contrast to previous work, no free-riding problem with respect to dealer services is necessary for manufacturers to prefer banning discounting of their products.     

Upstream conduct and price authority with competing organizations

We characterize the degree of price authority that competing upstream principals award their downstream agents in a setting where these agents own private information about demand and incur nonverifiable distribution costs. Principals cannot internalize these costs through monetary incentives and design “permission sets” from which agents choose prices. The objective is to understand the forces shaping delegation and the constraints imposed on equilibrium prices. When principals behave noncooperatively, agents are biased toward excessively high prices because they pass on distribution costs to consumers. Hence, the permission set only features a price cap that is more likely to bind as products become closer substitutes, in sectors where distribution is sufficiently costly, and when demand is not too volatile. By contrast, when principals behave cooperatively, the optimal delegation scheme is richer and more complex. Because principals want to charge the monopoly price, the optimal permission set features a price floor when the distribution cost is sufficiently low, it features instead full discretion for moderate values of this cost, and only when it is high enough, a price cap is optimal. Surprisingly, while competition (as captured by stronger product substitutability) hinders delegation in the noncooperative regime, the opposite occurs when principals maximize industry profit.     

Unlimited shelf space in Internet supply chains: Treasure trove or wasteland?

Internet retailing offers merchants limitless shelf space. This has led experts to highlight the existence of a “long tail” of offerings on the web and assert that the future of online business is “selling less of more.” However, it is difficult for Internet retailers of physical goods to sell a large scope of products without having to handle potentially large amounts of product returns from customers. This is due to the fact that customers can and do get overwhelmed by excessive product variety and often make erroneous purchasing decisions. We shed light on this issue through an assessment of theoretical predictions based on data from sales and returns of almost 7000 products in a particular product category. While retailers can benefit from expanding the scope of their inventories to generate Internet sales, the success of this strategy will depend on the control of unjustified product returns by consumers and the management of recurrent execution errors and product fit failures in transactions with customers. Furthermore, from our results, the gains that this strategy will bring to retailers will be bound by the amount of time products have been available on the Internet retailer's site, as well as by other attributes such as product price and size.     

Full or partial market coverage? A note on spatial competition with elastic demand

In this paper, a spatial model is used to endogenously determine product locations and prices when consumers have an elastic demand with a finite reservation price. I show under which condition a two‐stage Bertrand–Nash equilibrium yields maximal product differentiation with full market covering. Additionally, this paper highlights the effects of a change in the reservation price and in the utility loss rate on the equilibrium values of the model. The ambiguous effect of a change in the utility loss rate on prices constitutes a rather puzzling result. Copyright © 1999 John Wiley & Sons, Ltd.     

Determinants of consumer demand for circular economy products. A case for reuse and remanufacturing for sustainable development

We investigate determinants of consumer demand for circular (reused and remanufactured) products. Based on exploratory choice-based conjoint experiments with a sample of 800 adults in the United Kingdom, we examine two types of premium segment electronic appliances: a mobile phone and a robot vacuum cleaner. We find that consumers prefer partly circulated products over fully or not at all circulated products and that circular products can likely successfully enter the existing market at the retail price of a new product. Interestingly, circular products compete for market share primarily with new products, leaving the market share of second-hand options less affected. The results show a promising path for firms considering a transition to circular business models.     

A Theory of the Distribution of Underpriced Initial Public Offers by Investment Banks

It is well documented that a firm may choose to offer underpriced securities in an initial public offer. An open question is why investment banks do not retain underpriced offers in their portfolio. We argue that the distribution of underpriced securities allows banks of high qualify to signal their value to their customers, promoting in this way their other product lines. We show that the total dollar value of underpriced securities distributed (rather than the percentage value) acts as the signal. We also find that, all else equal, larger customers and those with more elastic demand functions receive n larger total dollar value of underpricing.     

A censored system of demand analysis to unpacked and prepackaged milk consumption in Turkey

The market driven and globally integrated economy since 1980 in Turkey has boosted milk demand like any other foods. We estimate the impacts of factors affecting households unpacked and prepackaged fluid milk demand in Turkey using a bivariate censored system of demand model. The correlation coefficient from bivariate censored model between these two products indicates that unobservable factors influencing the unpacked fluid milk would likely and significantly lower the consumption of the packed fluid milk for a household. The model also reveals that non-economic demographic factors play crucial roles in determining the quantity demanded of both products, especially the unpacked fluid milk. Both products are substitute one for another and both products are price elastic, suggesting that, for example, more than a change observed in the unpacked milk price would occur in the demand for the unpacked fluid milk with an increase or decrease in the unpacked fluid milk commodity prices. Interestingly, the unpacked fluid milk is an inferior good, while the prepackaged fluid milk is an normal good, indicating that the demand for the packed fluid milk increases with the increased in household income. Milk industries can generate additional revenues by decreasing both product prices.     

Market Segmentation: The Role of Opaque Travel Agencies

This paper investigates the role of discount travel agencies such as Priceline and Hotwire in the market segmentation of the hotel and airline industries. These agencies conceal important characteristics of the offered services, such as hotel locations or flight schedules. We explicitly model this opaque feature and show that it enables service providers to price discriminate between those customers who are sensitive to service characteristics and those who are not. Service providers can profit from such discrimination despite the fact that the opaque feature virtually erases product differentiation and thus intensifies competition. The reason is that the intensified competition for less sensitive customers enables service providers to commit to a higher price for more sensitive customers, which leads to higher profits overall. This explains why airlines or hotels are willing to lose the advantage of product differentiation and offer services through discount travel agencies.     

Optimal advance selling discount strategy with future-oriented consumers

This paper examines the advance selling decisions over two periods and considers future-oriented consumers who are more concerned about the product quality than price discounts. We find that the advance selling strategy is not always best, and its merits are contingent on parameters of the market and consumers. Moreover, there is no need to set a deep advance selling discount for the retailer if consumers are highly risk averse. Next, we analyze the feasible advance selling pricing strategies for the retailer. Finally, we observe that the retailer can announce a higher advance selling price if consumers are moderately risk averse.     

Demand estimation for the Iranian automobile industry

The main contribution of this paper is a simple theoretical framework and empirical estimations explaining the behavior of the manufacturers. The paper focuses on the frequently used methods of demand estimation for discrete choice models to analyze the Iranian automobile market. It shows how both major companies in Iran choose to produce lower quality products and why they still collusively charge high markups. Empirical estimations are based on Berry, Levinsohn, and Pakes (1995) to predict marginal costs and markups. Estimation results also support the hypothesis that manufacturers are charging high markups. In addition, the counterfactual analysis carried out supports the view that both duopolist firms prefer to operate at lower quality rather than at higher quality production levels. They also collusively price their products. Furthermore, analyses are performed using the Multinomial Logit methodology to better understand the Iranian automobile market. Tastes of people with different genders and ages for some specific cars are explained, and the effects of population changes on auto demand are predicted.     

Pricing the cloud: a QoS-based auction approach

ABSTRACT

Cloud computing is an evolutionary technology that offers on-demand resources and elastic services through the Internet. Most providers adopt fixed-price mechanisms (e.g. pay-as-you-go). However, a few providers have recently employed auction-like approaches to price cloud services. Meanwhile, cloud consumers pay more attention to Quality of Service (QoS) such as availability, which measures how well a service is performed. This paper proposes a novel auction approach that can efficiently allocate resources according to customers’ QoS preferences. The QoS-based pricing can generate more revenue than a fixed-price strategy. This research lies at the intersection of cloud computing, economics, and information systems.     

The multiproduct firm: Demand relationships and decision-making

If a firm produces more than one product, the price of one may affect the demand for others. Examination of this relationship reveals that for the profit maximizing firm the price differential between products is determined by differences in costs, differences in own price and cross price elasticities and the relative revenue from each product. The introduction of advertising results in an optimal advertising budget for each product that is the weighted sum of own and cross advertising elasticities divided by the average cost per advertisement.     

一类价格调整问题的数学模型及其求解方法

虽然市场需求是价格的函数，但企业在价格调整实践中往往不能直接获取需求函数的具体表达式，而只能在某一给定价格水平下观察到市场需求量的值。因此，企业通常不能直接利用需求函数来调整价格以完成预期的市场需求调整的战略计划。本文将企业为达到市场需求战略调整目的而考虑的价格调整问题归结为一个隐式互补问题。在该模型中，企业可以依据自身经营战略目标的调整相应地调整各类产品的市场价格，使得价格调整后的产品销量迭到预定的目标。文章给出了求解这类隐式互补问题的直接迭代法，并给出了数值结果。