Incentives For Buyers Research Articles

Impact Of Global Semiconductor Shortage on The Domestic New Energy Vehicle Supply Chain in Australia And Measures to Mitigate Such Risks in The Future

Different industries have been affected by the shortage of semiconductors globally, and one of the most affected industries is the New Energy Vehicle (NEV) industry within Australia. Semiconductors play a massive role in NEV features like battery management and power management. These factors include the COVID-19 pandemic, the rise in electronics demand, natural calamities, and most importantly the shortage which has affected NEV production and sales in Australia. This paper discusses the consequences of the lack of supply of such components on the Australian NEV supply chain: They stop production, low inventory levels, financial losses, and slowed innovation. It brings out vulnerability issues including dependence on limited suppliers from Asia and the absence of chip-making factories within North America. Based on the identified threats, the paper outlines the following solutions: supplier diversification, increasing inventory levels, raising supply chain visibility, investing in domestic semiconductor production, incentives for buyers, and sourcing non-semiconductor material technologies. Such measures are strategic and intended to secure an NEV supply chain in Australia that is both sustainable and environmentally friendly.

Contract Theory-Based Collection, Updating, and Packaging Combination Strategies in Data Trading

In the data transaction process, where a single supplier collects and sells data to heterogeneous data buyers, its transaction strategy relies on the data’s value. In this paper, we measure the value of data in terms of volume and currency and analyze the whole process from data collection and update management to sales. The data supplier determines the maximum amount of data to be collected based on the willingness to pay and the cost of collection and decides the optimal update frequency based on the update cost paid to improve the data utility. Because data sets can be replicated and split nearly costlessly, data suppliers maximize revenue by combining data sets of different sizes. In the information asymmetry scenario, contract theory is applied to obtain the optimal data collection quantity, update frequency, and packaging combination scheme to maximize the profit of data suppliers under data buyer incentive compatibility and individual rationality and compare them with the information symmetry scenario. The results show that data suppliers will only provide personalized data sets to some data buyers, and the needs of some buyers will not be met. Information asymmetry causes data suppliers to reduce the number of data collections and the actual purchases by data buyers, and data suppliers’ profits tend to decrease. The surprising conclusion is that data suppliers should set up more frequent update strategies in the information asymmetry case than in the information symmetry case to sustain the decrease in data utility caused by insufficient quantity. Funding: This work was supported by the National Natural Science Foundation of China [Grants 72071042 and 72201113]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/serv.2023.0018 .

Supply Chain Relationships in Circular Business Models: Supplier Tactics at Royal Smit Transformers

Background: Despite growing popularity, Circular Economy has not reached its full potential. One of the frequently mentioned success factors is the adoption of a Circular Business Model. However, fueled by (too) many constraints, its implementation is often hampered by so-called vicious cycles. Successful Circular Business Models require intensive collaboration between buyers and suppliers, with one of the key questions remaining who takes the initiative and leads the development: buyer or supplier? Methods: Through a single case study combining desk research, interviews, participative observations and analysis of vicious cycles, we investigate how supply chain relationships managed by the supplier can enhance the implementation of Circular Business Models. Results: We show that supplier tactics can relax constraints and break vicious cycles through (1) buyer–supplier relationship management, (2) functional integration of stakeholders and (3) incentive management. We also show that, due to supplier captive conditions, a number of enabling factors are indispensable, namely: (1) the availability of buyer incentives; (2) (joint experimenting to develop) circular knowledge; (3) sharing clear visions on circularity; (4) being transparent in possibilities; and (5) supply chain leadership. Conclusions: As a consequence, strategic trust-based partnerships are a prerequisite for turning vicious cycles into virtuous cycles. Future research should also investigate the role of the buyer, including buyer captive conditions, and how to shape supply chain leadership. Finally, the role of supplier tactics in relation to other success factors next to Circular Business Models needs to be further explored.

Pharmaceutical markets in Japan and the United States

Although the United States and Japan are the two largest markets for branded pharmaceuticals, their structures and market performance are quite different. Like its European counterparts, a Japanese government ministry sets the prices paid to national and international drug companies. In contrast, US prices are set largely through negotiations between private health insurers and drug companies. Related to these different structures are quite different results. In particular, for pharmaceuticals sold in both countries, US prices are about twice what they are in Japan. Since many of the same companies sell pharmaceuticals in both countries, these differences require an explanation. A frequent one offered is that Japanese authorities exercise their inherent monopsony power to obtain the low prices, which private insurers in the United States are unable to impose. While correct on the surface, this explanation fails to confront deeper policy issue concerned with promoting public health. Because pharmaceutical research and development is a global public good, there are strong incentives for buyers to “free ride” on the outlays of others. Under those circumstances, global R&D outlays, based on country-specific incentives, would be set below optimal levels, and the supply price of substantial pharmaceutical innovation would not be covered. Because the US market is more than half the world total, its incentive structure is fundamentally different from that of Japan. Indeed, higher US drug prices, which drive worldwide incentives, are needed to promote current numbers of new pharmaceuticals introduced in both countries.

A robust textual analysis of the dynamics of Hong Kong property market

AbstractMarket sentiments influence the dynamics of Hong Kong’s macro‐critical property market, but the unobservable nature of market sentiments makes it difficult to systemically assess this sentiment channel. Using text mining techniques, this paper sets up a news‐based property market sentiment index and a Google Trends‐based buyer incentive index for Hong Kong and studies the sentiment channel of transmission in the Hong Kong property market. The news‐based property market sentiment index can reflect the change in sentiments in past key events, with the sentiments in the primary market tending to lead that of the secondary market during the low housing supply period. For the Google Buyer Incentive Index, we find that it has value‐added in forecasting (or nowcasting) the official property price index. In mapping out the sentiment channel using a structural vector‐autoregressive model, we find that an improvement in market sentiments could stimulate buyers’ incentives, which then together would affect property prices and transaction volumes.

Information Design Using Copulas

We propose an equivalent formulation of a two player information design problem in terms of choosing a copula, as opposed to choosing a joint distribution of a signal and the state variable. We then propose a copula based signal ordering which is both necessary and sufficient for the more informative signal to generate higher dispersion of the distribution of posteriors. Applications involving Bayesian persuasion with a continuous state variable, a buyer's incentives to acquire information and a seller's incentives to provide information in a bilateral trade setting, and the role of insider information in European and American call option valuations are presented.

A Robust Textual Analysis of the Dynamics of Hong Kong Property Market

Market sentiments influence the dynamics of Hong Kong’s macro-critical property market, but the unobservable nature of market sentiments makes it difficult to assess systemically this sentiment channel. Using text-mining techniques, this paper sets up a news-based property market sentiment index and a Google Trends-based buyer incentive index for Hong Kong, and studies the sentiment channel of transmission in the Hong Kong property market. The news-based property market sentiment index can reflect the change in sentiments in past key events, with the sentiments in the primary market tending to lead that of the secondary market during the low housing supply period. For the Google Buyer Incentive Index, we find that it has value-added in forecasting (or nowcasting) the official property price index. In mapping out the sentiment channel using a structural vector-autoregressive (SVAR) model, we find that an improvement in market sentiments could stimulate buyers’ incentives, which then together would affect property prices and transaction volumes.

Which is More Effective for Platform Performance: Punishments or Incentives?

The success of online third-party business-to-business (B2B) platforms relies heavily on simultaneous governance of both sellers and buyers. This study examined and compared the effects of punishments and incentives on seller’s opportunism toward platforms, buyers’ trust in platforms, and platform performance using data from B2B platforms in China. The results show that punishments (both severity and speed) and incentives toward sellers are negatively related to sellers’ opportunism toward platform. The effect of punishment severity is greater than that of punishment speed or incentives on curbing seller opportunism, and the effect of punishment speed is not significantly different from that of incentives. The findings also reveal that both punishment severity and speed toward sellers are positively related to buyers’ trust in platform, although their effects are not significantly different from each other. Additionally, incentives toward buyers do not significantly affect buyers’ trust in platform, and both punishment severity and speed have a greater effect than buyer incentives on building buyer trust. These findings not only make novel theoretical contributions to the B2B platform and governance literature by exploring platforms’ triadic governance issue but also provide valuable practical suggestions for platform managers.

A Space Problem and not a Housing Problem

Housing affordability has decreased dramatically since the 1960s. Housing policy in the post-WWII period mandated the construction of new housing on a massive scale with significant government subsidies as well as financial incentives for buyers, especially from government loan agencies like the HUD (created in 1965) and FHA. The creation of GSAs to enhance the loan stability market and promote housing (like Freddie Mac) in 1970 was a part of this effort. However, housing affordability began to fall in the 1980s and has dropped to levels not seen since the pre-war and immediate post-WWII periods which spurred the passage of the Wagner-Steagall Act in 1937 to create more housing. The lack of affordable housing has many factors, but some of the most important are: the increase in the population, financial return to investors and builders, income and wage growth, and size of house to cost, demolition of older affordable housing for new housing. Over the past 100 years housing space per person as increased dramatically increasing costs. The essential element in housing production in the private sector is profitability, returns on affordable housing are not as great as market rate or luxury housing, so competition for investment dollars is skewed to the latter. Government programs to balance the need for affordable housing have not kept up, and resistance from the housing sector (banks, investors, builders) have tended to limit such programs for fear that increased supply of affordable housing would decrease rents and property values.

Can Smart Contracts Ameliorate Adverse Selection in the Market for Second Hand Goods?

The essay explores how the advent of blockchain technology can augment digitally encoded smart contracts to replace trust-based third-party functions of verification and enforcement. Recent literature suggests that distributed and decentralized ledger of transactions could be leveraged to not only reduce transaction costs but also mitigate asymmetries of information. The essay endeavours to theoretically model and assess transactions on blockchain platforms via smart contracts versus conventional spot market trade. The essay finds that asset-quality delineation mechanism, history of similar transactions on the platform as well as associated verification costs play a key role in affecting incentives of buyers and sellers to trade using smart contracts.

On the interaction of technology upgrade and buyer entry in a supply chain

This study examines the interaction between technology upgrade and a buyer entry in a supply chain, where an incumbent buyer (he), who upgrades a supplier's production technology through direct investments, may face a rival buyer (she) entering the market by purchasing from the common supplier. We first find the buyer entry can increase the incumbent buyer's incentive to conduct the technology upgrade: if the production cost is high as well as the investment cost is low in the scenario without technology spillover, he will upgrade the production technology to a higher level after the buyer entry. At such level of the upgraded technology, the incumbent buyer is better off in the market with entry, contrary to conventional belief that the entry likely hurts the existing firm. Moreover, our research reveals that upgrading the suppler's production technology can, in turn, influence the buyer entry and further the concentration of the product market. Without technology upgrade or with that but in the absence of technology spillover, the entrant buyer will be fed by the supplier, resulting in a successful entry and thereby a competitive market. However, when technology upgrade occurs along with technology spillover, supplying products to the entrant buyer will be refused by the supplier under a high production cost and a low investment cost, incurring her entry failure and thus the market monopoly.

The trajectory of China's new energy vehicles policy

This paper describes and analyses the trajectory of public policies on new energy vehicles (battery electric, plug-in hybrid, and fuel cell vehicles) in China from 2009 to 2018s first quarter, with a focus on policies adopted by the Central Government of China (CGC). The aim is to analyse the recent policy path on new energy vehicles (NEVs) under the demand-pull versus technology-push theoretical approaches. In this context, this paper classifies the main public policies on NEVs adopted in China in recent years on these two broad approaches and analyses the direction of federal NEV policies, based on its trajectory. The article shows that the policies adopted by the central government changed dramatically in recent years, moving from simple buyer incentives (demand-pull policies) to a more complex set of policies comprising incentives not only for buyers, but also stimulus for automotive manufacturers to invest in R&D, and technological densification (demand-pull plus technology-push policies).

Markdown Budgets for Retail Buyers: Help or Hindrance?

For many retailers, markdown decisions are taken by retail buyers whose compensation is based on sales revenue so their objective is to maximize it through the season. This implies that the buyers' objectives are not perfectly aligned with the overall profitability the firm. Many retailers set markdown budgets prior to the season to control margin erosion and increase profitability. Markdown budget constrains the buyers on the amount of discounts that they can apply on a given inventory of merchandise and sets a limit on the dollar value of markdowns for the season. While markdown budgets may be useful in preventing excessive discounts, they can have a detrimental effect on the buyers' ability to respond to poor market and remove distressed inventory. We investigate the effectiveness of this practice in aligning the incentives of buyers with that of the firm, and provide guidance on how these budgets should be established ahead of time. We consider a firm with a fixed inventory of a seasonable item, and a single chance to mark the price down. The retailer knows only the demand distribution at the beginning of the season, but the market information is revealed during the season to the buyer. We first characterize the buyer's markdown policy and understand the circumstances under which this can be different from the retailer's markdown policy. We use our model to determine the optimal markdown budget and quantify its effectiveness considering different factors such as the level of demand uncertainty, initial markup, and market's responsiveness to markdowns.

How may incentives for electric cars affect purchase decisions?

In this paper, the impact of five different incentives for buyers of zero emission vehicles (ZEV) is investigated with a stated choice experiment. The tested incentives are direct subsidies, free parking, a separate CO2 tax, an increase of fuel costs by tax elevation, and an increase of available charging infrastructure. By implementing the mobility patterns of the respondents, it was possible to simulate estimations of ecological impact and modal shift with a random utility model (mixed logit). Based on 875 complete questionnaires, the simulation results show that giving incentives to these buyers ecological rebound effects are expected: Mostly people with a low CO2-emission rate regarding their daily transportation routines (cyclists and public transport users) will exploit these incentives. They show a significantly higher likelihood of choosing alternatively propelled cars than conventional car users. Consumers that usually use a passenger car for their daily mobility routines are mostly unwilling to change to ZEV even when incentives are given.

Information Revelation in Procurement Auctions with Two‐Sided Asymmetric Information

A buyer needs to procure a good from one of two suppliers offering differentiated products and with privately observed costs. The buyer privately observes the own valuations for the products and (ex ante) decides how much of this information should be revealed to suppliers before they play a first score auction. Our main result is that the more significant is each supplier's private information on the own cost, the less information the buyer should reveal. We also examine the buyer's incentives to make untruthful announces.

Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market

Using discontinuities in housing transaction taxes in New York and New Jersey we find robust price bunching. Incidence for transactions local to the notch falls on sellers, with no evidence of evasion. The volume of missing transactions above the notch exceeds those bunching (beyond the usual extensive-margin response), indicating incentives for buyers and sellers not to transact (market unravels). The possibility of unraveling affects interpretation and estimation of bunching. Away from the threshold, we find increased discounts and weaker relationship between listing and sale prices. Equilibrium bargaining framework highlights that taxation affects the ultimate allocation in this search market. (JEL H71, R21, R31)

Supply Disruptions, Heterogeneous Beliefs, and Production Efficiencies

Recent years have witnessed the pervasive supply disruptions and their impacts on supply chain performance. In this study, we investigate the optimal procurement design with supply disruptions and heterogeneous beliefs between the buyer and the supplier. We examine the impact of information asymmetry on the supplier's belief, the control right of the backup production, and the verifiability of supply disruption. The belief heterogeneity creates speculative gains and losses because the buyer and the supplier hold different estimates of the disruption probability. We demonstrate that the buyer's incentive to exploit this belief heterogeneity leads to real production inefficiencies in different scenarios. The production efficiency is not necessarily improved with more transparent information. Moreover, a very pessimistic supplier may have no incentive to invest in improving the reliability even if this is costless, and the supplier may produce more when the expected production cost becomes higher. When the buyer sees some value in using the supplier's estimate to update his own belief, we find that the main results hold unless the buyer completely abandons his belief.

Supply chain tracking: aligning buyer and supplier incentives

PurposeThis paper aims to present how the success of inter‐organizational systems (IOS) implementation projects can be increased by aligning the different incentives of buyers and suppliers.Design/methodology/approachThe research method employed is case study and its unit of analysis is a network of supplier and wholesaler (buyer) companies acting in the Finnish technical trade industry, which are implementing inter‐organizational tracking. The implementation project followed an implementation process model developed to execute the case study.FindingsFor a buyer, the challenge in IOS implementation is that suppliers feel the adoption more difficult and have less identifiable benefits. However, in the case study, suppliers were ready to implement tracking solution because they understand that improvements in IOS help to apply common industry data exchange standards and will lead to better supply chain collaboration, which also increases their operational performance in the long run.Research limitations/implicationsThis paper concentrates on supplier and buyer incentives but also the role of other supply chain members such as logistics providers could be analyzed to examine different factors for IOS implementation.Practical implicationsIf the buyer takes a cooperative approach to IOS integration, suppliers can be motivated to integrate tracking as a part of their own operations. This high‐level integration offers more options to improve the management and hence the performance of the whole supply chain than low‐level integration.Originality/valueIOS implementation projects are seldom studied from the perspectives of buyers and suppliers in the supply chain.

Do Buyer Incentives Work for Houses during a Real Estate Downturn?

The impact of incentives on marketing duration is examined for residential real estate using data from the Multiple Listing Service during a real estate downturn. The focus is on incentives offered directly by sellers to potential homebuyers. The evidence suggests that incentives are not capitalized into the selling price during the softened market conditions. Alternatively, incentives are found to have a significant reduction in marketing time, however this is found to be true only for closing costs and not for other incentive classifications. The benefit of reduced expected market time from offering incentives is quickly diminished when the seller initially overprices the listing by a large amount.

Effects of unbalanced incentive measures on buyer performance – an empirical study in Taiwan

PurposeThis paper aims to investigate the performance effects of an incentive plan that links buyers' compensation to financial measures, namely sales and gross margin, in the retail industry. It seeks to examine the issue using field data obtained from the 3C (computers, communications, and consumer electronics) company, the largest electronics chain store business in Taiwan.Design/methodology/approachIn addition to t‐tests, the authors use a multiple regression model to examine the impact of the buyer incentive plan on purchasing performance.FindingsIt was found that the gross margin return on inventory investment (GMROI), the most critical purchasing performance measure in retailing, deteriorated after implementing the incentive plan. Further analysis showed that although sales and gross margins increased as a result of the plan, the benefits were completely offset by a significant decrease in inventory turnover.Research limitations/implicationsThis study has two limitations. First, the case study involved a specific retail chain. Thus, the extent that the results can be generalized to other organizations or other industries has yet to be explored. Second, to obtain a more comprehensive dataset and more observations, procurement team data was used instead of individual buyer data to measure the purchasing performance.Practical implicationsManagers should be aware of possible negative impacts when they design incentive plans, e.g. dysfunctional behavior among employees.Originality/valueAn incentive plan should incorporate all critical components related to buyer performance if there is to be improvement in terms of the key performance measures. The paper contributes to the literature by providing empirical evidence about the appropriateness of the performance measures used in buyer incentive plans designed for the retail industry.