An experimental approach to valuing new differentiated products

An experimental store was created to evaluate initial demand for locally produced and guaranteed tender steak products as a more realistic alternative to contingent valuation (CV) and dichotomous-choice experimental methods. Strengths of the approach are incentive compatibility, a realistic consumption set, and a familiar choice environment. Consumers selected among USDA Choice, premium quality, lean, guaranteed tender and locaily produced strip steaks. A double-hurdle count data model indicated initial willingness-to-pay (WTP) for locally produced steak comparable to prior CV results, but demand was highly elastic. Demand for premium quality steak crowded out demand for the guaranteed tender product, contrasting with prior dichotomous-choice experimental results.     

Managing platform architectures and manufacturing processes for nonassembled products

The article presents methods for defining product platforms and measuring business performance in process intensive industries. We first show how process intensive product platforms can be defined using the products and processes of a film manufacturer. We then present an empirical method for understanding the dynamics of process intensive platform innovation, allocating engineering and sales data to specific platform and product development efforts within a product family. We applied this method to a major product line of a materials manufacturer. We gathered ten years of engineering and manufacturing cost data and allocated these to successive platforms and products, and then generated R&D performance measures. These data show the dynamic of heavy capital spending relative to product engineering as one might expect in a process intensive industries. The data also show how derivative products can be leveraged from underlying product platforms and processes for nonassembled products. Embedded within these data are strategies for creating reusable subsystems (comprising components, materials, etc.) and common production processes. Hard data on the degree to which subsystems and processes are shared across different products frequently are typically not maintained by corporations for the duration needed to understand the dynamics of evolving product families. For this reason, we developed and applied a second method to assess the degree of reuse of subsystems and processes. This method asks engineering managers to provide subjective ratings on an ordinal scale regarding the use of technology and processes from one product to the next in a cumulative manner. We find that high levels of reuse generally indicate that a product family was developed with a platform discipline. We applied this measure of platform intensity to two product lines of integrated circuits from another large manufacturer. We used this method to gather approximately ten years of information for each product family. Upon analysis, one product family showed substantial platform discipline, emphasizing a common architecture and processes across specific products within the product line. The other product family was developed with significantly less sharing and reuse of architecture, components, and processes. We then found that the platform centric product family outperformed the latter along a number of performance dimensions over the course of the decade under examination.     

Beneficial changes in random variables under multiple sources of risk and their comparative statics

The consequences of a change in a random parameter are determined for a decision model with more than one source of randomness. The two cases of independent and stochastically dependent sources of risk are discussed. Four comparative static theorems are given. These state the effect of first degree stochastically dominant shifts or risk decreases for one random variable while the other random variable is held fixed. Deterministic transformations are used to represent random parameter changes. The results are presented in the context of the coinsurance demand model with a risky insurable asset and background risk.     

Spatial aspects of the diffusion of technological innovations among American municipal governments

Examination of the spatial diffusion patterns of a sample of 43 technological innovations organized into four functional areas—fire fighting, traffic control, air pollution control, solid waste collection, and disposal—indicates the absence of systematic patterns of either rank-size or contagious diffusion of these innovations among municipal governments in the United States. Absence of these general patterns reflects an inadequate identification in existing theories of spatial diffusion processes of variables that enter into agency decisions to adopt new technologies and the inadequate identification of possible interactions among variables. In particular, attempts to model diffusion patterns based on neighborhood effect or on hierarchical relationships fail to take into account, it least for the classes of adopters and innovations studied here, polynuclear propagation and the role of intermediaries (e.g. professional associations, governmental agencies, suppliers) in communication patterns or the role of site-specific factors that determine the “suitability” or “worth” or an innovation to different potential adopters.     

Elderly activity patterns and demand for transportation in a small city setting2

Although elderly in a small city setting leave their homes for approximately the same purposes and at the same frequency as elderly in metropolitan settings, they are much more dependent on the automobile. A higher proportion of the elderly in a small city drive, but driving status did not have a significant impact on frequency of travel or the spatial extent of travel. Health status was not an important factor when other variables were taken into account, but the older elderly did take fewer trips than the younger elderly. Income, sex and residential location had modest impacts on activity patterns, but the use of a well-established Dial-a-Ride system was minimal. Variation in activity patterns among the elderly in a small city suggested continuity of behavior, a modest decline with age and a strong preference for automobile travel or walking from conveniently located housing complexes.