Buyers Face Research Articles

Fiscal policies and car choices in Italy and Norway: A scenario analysis based on a stated-preference survey

Norwegian and Italian car drivers make very different car choices. This paper investigates the influence of fiscal policies on car buyers’ choices, using data collected from a stated preference survey conducted in 2021. After estimating a joint random parameter logit model, we simulated the market shares of five car powertrains under three scenarios: “Italian car buyers face the same net purchase car prices and fuel\\electricity costs as the Norwegian car drivers and vice versa”, “Italy adopts the Norwegian registration tax”, and “Both Italy and Norway adopt a social cost internalizing registration tax”. The results indicate that Italian car users are reluctant to switch to battery electric cars (BEVs). They would choose BEVs more frequently in the three scenarios envisaged but without reaching the corresponding Norwegian levels. If Italy would adopt the Norwegian registration tax system, BEVs’ market share would gain 5.4 percentage points relative to the baseline scenario, while under the social cost internalizing scenario, BEVs’ market share would improve by 3.4 and PHEVs’ one by 0.2 percentage points. On the contrary, Norwegians are BEV-oriented and would comparatively preserve a high BEV share. In the social cost internalization scenario, the BEV share relative to the baseline scenario would decrease by 7.2 percentage points, petrol cars would gain 1.2, HEVs 2.9, PHEVs 3.4, and diesel cars would lose 0.3 percentage points. In general, there seems to be a lock-in or path dependence effect that limits BEV penetration in Italy and prevents the decline of the BEV share in Norway.

Best of Both Worlds Ad Contracts: Guaranteed Allocation and Price with Programmatic Efficiency

Buying display ad impressions via real-time auctions comes with significant allocation and price uncertainties. We design and analyze a contract that mitigates this uncertainty risk by providing guaranteed allocation and prices while maintaining the efficiency of buying in an auction. We study how risk aversion affects the desire for guarantees and how to price a guaranteed allocation. We propose to augment the traditional auction with a programmatic purchase option (which we call a Market-Maker contract) that removes allocation and price uncertainties. Instead of participating in the auction, advertisers can secure impressions in advance at a fixed premium price offered by the Market-Maker. It is then the responsibility of the Market-Maker to procure these impressions by bidding in the auction. We model buyers as risk-averse agents and analyze the equilibrium outcome when buyers face two purchase options (auction and Market-Maker contract). We derive analytical expressions for the Market-Maker price that reveal insightful relationships with uncertainties in the auction price and buyers’ risk levels. We also show the existence of a Market-Maker price that simultaneously improves the seller’s revenue and the sum of buyers’ utilities. As a building block to our analysis, we establish the truthfulness of the multiunit auction when buyers have nonquasilinear utilities because of risk aversion. Recently, the Google’s Display & Video 360 platform started offering a product akin to Market-Maker called “Guaranteed Packages,” which was inspired by this paper. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

Programmatic: strategi efektif pemasangan iklan di era digital

Programmatic Advertising (PA) is changing the way advertisers and publishers interact in the industrial 4.0. PA collects cookies from site pengguna to help advertisers identify the required audience. In PA, an important question is regarding the level of penetration and the reasons for using PA, especially in Indonesia. PA is different from traditional buying and selling advertising, which must bring together sellers and buyers face to face. Qualitative research is used in studying the situation based on the point of perspective of PA users with relevant backgrounds. Data collection techniques with interview observation using open coding, axial, and selective. Then, they used thematic and narrative data analysis with data confirmation through triangulation techniques in order to see data from various perspectives. As a result, in the Indonesian context, PA is growing well, it's just that it is still constrained by a complex implementation process (requires knowledge, insights, and networks).

Supplier Dependence Asymmetry and Investment in Innovation: The Role of Psychological Uncertainty

A key source of competitive advantage for large firms accrues from investments in innovative products and processes by their suppliers, incentivized by a positive relationship climate. A fundamental hindrance to such climate lies in a condition that commonly characterizes buyer-supplier relationships: asymmetric levels of dependence between business partners. Such asymmetry has been shown to be detrimental to the relationship, enhancing the likelihood of conflict, and negatively impacting the performance of the more dependent party. Considering that such dependence asymmetry is likely to persist, large buyers face the challenge of promoting a relationship environment that provides an incentive for suppliers to invest in innovation. In this study, we propose that large, dominant buyers can influence suppliers’ intentions and behaviors through mitigating two psychological dimensions of uncertainty – perceived riskiness and perceived ambiguity – which emerge from a situation of dependence asymmetry. Specifically, using the lens of resource dependence theory we investigate the effects of these two dimensions of uncertainty on a supplier’s trust, commitment, and willingness to invest in innovation, as well as the moderating effect of a buyer’s information sharing in shaping a supplier’s perceived uncertainty. Our findings indicate that a supplier’s dependence on a large customer increases its perception of ambiguity and riskiness in the relationship, negatively impacting its trust, commitment, and willingness to invest in innovation. However, a buyer’s initiative to share relevant and timely information with the supplier reduces its perceived uncertainty, enhancing its attitudes towards the buyer and encouraging innovation. As such, positive relational attitudes by suppliers can be achieved even under conditions of dependence asymmetry.

An appraisal mechanism for a social marketplace

Social networks have become indispensable in our daily lives, and have significant implications for the development of electronic commerce. In centralized e-marketplaces, buyers face two main problems in purchasing decisions. Firstly, for some products, sellers do not provide product information. Secondly, buyers can be deceived by fake reviews or ratings manipulated by malicious providers. In this research, after analyzing users’ social activities, we propose an appraisal mechanism for the social marketplace, which customers can use to find products and to obtain credible referrals. The proposed mechanism can effectively discover suitable and trustworthy sellers to expedite the online purchasing process and enable social commerce to flourish.

Sourcing Innovation: Integrated System or Individual Components?

Problem definition: Most industrial innovations consist of multiple interacting components that must be combined into a final product to form an integrated system. When procuring such complex innovations from their suppliers, buyers face a substantial challenge: Should they tender the integrated system as a whole or, instead, procure the system’s components individually from (possibly) different suppliers? Academic/practical relevance: Suppliers have become a major source of innovation for many firms, so buyers ponder how best to structure their procurement efforts. This paper offers guidance on how complex industrial products can be optimally sourced when the buyer’s primary goal is to identify and incentivize innovation. In contrast, most previous research on procurement has concentrated on cost-reduction efforts. Methodology: We use a game-theoretic model to design and compare different procurement mechanisms that allow a buying firm to tap into the innovation potential of its supplier base. Results: Three factors largely determine whether a buyer should procure an integrated system or individual components—namely, the novelty of the innovation to be sourced, the size of the supplier base, and the extent and distribution of component integration costs. We demonstrate how buyers can improve the effectiveness of procurement mechanisms via active supplier management. Managerial implications: Our study provides clear guidelines for managers seeking to source complex industrial innovation. The recommendations presented here reveal how the optimal procurement mechanism changes with the characteristics of the desired product and of the buyer’s supplier base.

Dynamic Trading, Imperfect Competition and Forward Contracts

Why do traders trade forward and future contracts on assets they could buy or sell directly? I provide an equilibrium model in which this can occur both for hedging, and for manipulation. By delaying trade to mitigate price impact, buyers (sellers) face the risk that the price unexpectedly increases (decreases) due to a supply shock. Futures with maturity shorter than traders' horizon would allow them to share this risk. However, once futures are introduced, traders also want to manipulate futures payoff: futures buyers want to buy the asset at futures maturity to raise the spot price, and conversely for sellers. Trading patterns are opposite futures are used for hedging or for manipulation: with hedging, spot sellers (buyers) also sell (buy) futures and hold inventory for longer, while with manipulation, spot sellers (buyers) buy (sell) futures and liquidate inventory more quickly. In equilibrium, manipulation dominates, and at least for some parameter values, futures decrease welfare.

Supplier dependence asymmetry and investment in innovation: The role of psychological uncertainty

A key source of competitive advantage for large firms accrues from investments in innovative products and processes by their suppliers, incentivized by a positive relationship climate. A fundamental hindrance lies in a condition that commonly characterizes buyer-supplier relationships: asymmetric levels of dependence between business partners. Such asymmetry has been shown to be detrimental to the relationship, enhancing the likelihood of conflict, and negatively impacting the performance of the more dependent party. Considering that such dependence asymmetry is likely to persist, large buyers face the challenge of promoting a relationship environment that provides an incentive for suppliers to invest in innovation. In this study, we propose that large, dominant buyers can influence suppliers' intentions and behaviors by mitigating the effects of their perceived riskiness and ambiguity that emerge from a situation of dependence asymmetry. Specifically, using the lens of resource dependence theory, we investigate the effects of these two psychological dimensions of uncertainty on a supplier's trust, commitment, and willingness to invest in innovation, as well as the moderating effect of a buyer's information sharing in shaping a supplier's perceived uncertainty. The model is tested with a scenario-based experiment and results are corroborated by interviews with experienced managers of retail suppliers. Our findings indicate that a supplier's dependence on a large buyer increases its perception of ambiguity and riskiness in the relationship, negatively impacting its trust, commitment, and willingness to invest in innovation. However, a buyer who shares relevant and timely information with the supplier mitigates its perceived uncertainty, promoting the supplier's positive attitudes towards the buyer and incentivizing innovation. Sharing operational and strategic information such as point-of-sales data, sales forecasts, or strategic plans, becomes a valuable strategy to powerful buyers in the pursuit of becoming a preferred customer and enhancing a supplier's resource mobilization towards the relationship.

Online Auction Customer Segmentation Using a Neural Network Model

Online auction is a huge growing business. Most of online buyers face a big problem of predicting the seller' s behavior to submit a reasonable price for wining a bid. Unfortunately, auction web sites e.g. eBay provide only a user ID or nickname to identify a consumer. This situation built up a wall between users for truly knowing each other. To overcome such a prob- lem, this research proposes a neural network model called SOM to segment online auction cus- tomers into homogenous groups. Based on the segmented groups, the behavior of online bidders can be divided into three types: patient deals, impulsive deals and analytic deals. To demonstrate the feasibility of the proposed methodology, 1470 records retrieved from Taiwan eBay are used to conduct an empirical study. In conclusion, the percentages of each customer type are 39.3 % (impulsive deals), 27.8 % (analytic deals) and 32.2 % (patient deals). The analyzed result shows that more than sixty percent of bidder's behave rationally and patiently.

Real consequences of open market operations: The role of limited commitment

We study how limited commitment in credit markets affects the implementation of open market operations and characterize when they result in real indeterminacies and when they have real effects. To do so, we consider a frictional and incomplete market framework where agents face stochastic trading opportunities and limited commitment. We find necessary and sufficient conditions for the existence of a unique stationary monetary equilibrium when limited commitment does not restrict agent’s choices. However, real indeterminacies are possible when buyers face a binding no-default constraint. When the endogenous borrowing limit binds and bonds are not priced fundamentally, open market operations generically have real effects. A sale of government bonds can increase or decrease interest rates, depending on the nature of the equilibria. These phenomena are consistent with what is observed in the US. Moreover, when multiple equilibria exists welfare is larger at the steady state with a lower liquidity premium on government debt. Finally, government bond purchases can be used to rule out real indeterminacies, thus finding another rationale for such policy.

Informational Cycles in Search Markets

I show that market participants’ equilibrium beliefs can create fluctuations in the volume of trading, even in a stationary environment. I study a sequential search model where buyers face an unknown distribution of offers. Each buyer learns about the distribution by observing whether a randomly chosen buyer traded yesterday. A cyclical equilibrium exists where the informational content of observing a trade fluctuates, which leads to fluctuations in the volume of trading. The cyclical equilibrium is more efficient than steady-state equilibria. The efficiency result holds also if buyers get a signal about past transaction prices or past trading volumes. (JEL D82, D83)

A multi-constrained supply chain model with optimal production rate in relation to quality of products under stochastic fuzzy demand

For the production of complex products, this study investigates a flexible production system with a variable production rate as an alternative method to overcome the stock-out risk because of the uncertainty of fuzzy-stochastic demand in an integrated model. The variable production rate enables vendors to fulfill demand uncertainties and reduce the lead time. To establish the relationship between the process quality and production rate three functions, linear, quadratic, and cubic, have been introduced in the mode. The development of such an advanced flexible production system requires a considerably higher setup cost and increases the supply chain cost. To overcome this, the authors introduce a discrete investment function to control setup costs. Authors utilize a crashing cost to reduce the duration of the lead time within the supply chain (SC) structure. In real-life, vendors and buyers face different constraints and set some targets for themselves. Here, the authors consider the storage space and budget constraint for the vendor and customers’ service level constraint for the buyer. An SC model is proposed to find the optimal order quantity, reorder point, lead time, investment for setup cost reduction, and production rate with the minimized total expected cost of the chain. To get the optimal solutions to decision variables, the authors employed a classical optimization technique in the proposed model. An improved algorithm for the global minimum expected cost of SC is designed under the flexible production system. Three numerical examples with comparative study to the previous model and the sensitivity analysis are included to test and validate the proposed model. The numerical analysis and comparative study prove that the proposed model attains the minimum SC cost at the decision variables' optimal values.

When suppliers shift my boundaries: Supplier employee mobility and its impact on buyer firms' sourcing strategy

AbstractResearch summaryBuyer firms respond to supplier employee mobility by reshuffling work among suppliers. However, the extant literature has not considered plural‐sourcing firms which can bring work back in‐house. In this paper, we develop a governance framework in which buyers engage in a comparative assessment of the costs associated with different sourcing modes following supplier employee mobility. Due to the imperfect transferability of social capital and associated uncertainty, buyers face increased contracting costs when supplier employees move. This prompts plural‐sourcing buyers to increase their reliance on insourcing when the costs of adjusting in‐house capacity are relatively low and when the costs of switching to alternative suppliers are relatively high. The analysis of data on patent prosecution activities and patent attorney mobility provides support to our theory.Managerial summaryThis study provides a decision framework for buyer firms when their suppliers experience employee departures. Buyers may choose to (a) stay with the suppliers suffering employee losses or (b) follow mobile employees to their new suppliers. However, in both cases contracting becomes more difficult due to the disruption in supplier relationships or the need to work with new suppliers. There is a third option (c) though which is to bring work in‐house. We explain that buyers opt for option (c) when it is easy to expand in‐house capacity and when the costs of switching to alternative suppliers already in use are relatively high. Thus, supplier employee mobility may lead buyer firms to adjust their reliance on outsourcing even when there are no buyer employee departures.

Monopoly and Competition in the Markets for Information

This paper considers the generation and provision of data products in the markets for information. Buyers face a decision problem with uncertainty of two states. They can purchase experiments to augment their private information. A buyer’s willingness to pay for an experiment depends on his private information. To generate these experiments, sellers have to make an investment, which determines the most informative experiment a seller can provide. Sellers then post menus of experiments and prices. We characterize the optimal menu given any investment level and derive the optimal investment. When two sellers compete with investment, we find an equilibrium in which two sellers split the market. One seller only serves to high belief buyers and the other serves to low beliefs buyers. Each seller specializes in generating a more informative signal about one state. Monopoly seller always provides more informative experiments, and to more buyers, than the case of duopoly competition.

When Suppliers Shift My Boundaries: Supplier Employee Mobility and Its Impact on Buyer Firms’ Sourcing Strategy

Buyer firms are found to respond to supplier employee mobility by reshuffling work among suppliers. However, the extant literature has not considered plural-sourcing firms which can bring work back in-house. Here, we develop a governance framework in which buyers engage in a comparative assessment of the costs associated with different sourcing modes following supplier employee mobility. Due to the imperfect transferability of social capital and associated uncertainty, buyers face increased contracting costs when supplier employees move. This prompts plural-sourcing buyers to increase their reliance on insourcing when the costs of adjusting in-house capacity are relatively low and when the costs of switching to alternative suppliers are relatively high. The analysis of data on patent prosecution activities and patent attorney mobility provides support to our theory.

Buyers of ‘lemons’: How can a blockchain platform address buyers’ needs in the market for ‘lemons’?

The second-hand automotive market is one with the least trust from consumers. Customers on the second-hand car market suffer from such problems as the car being in worse condition than initially indicated, accident damage that is not disclosed, fraud, etc. Akerlof, described the market for used cars as an example of the problem of information asymmetries and resulting quality uncertainty. In order to cope with quality uncertainties, used car buyers actively engage themselves in information seeking. Blockchain technology promises to automatize the tracking of cars through their lifecycles and provide reliable information at any point in time it is needed. In our study, we investigate the problems car buyers face during information seeking and propose requirements for the design of a blockchain-based system to address these.

Some Public Procurement Challenges in Supporting and Delivering Smart Urban Mobility: Procurement Data, Discretion and Expertise

This paper explores three of the challenges that public buyers face when designing public tenders to support the delivery of smart urban mobility initiatives and when supervising the execution of the relevant contracts. First, the paper covers emerging issues around access and reuse of transport data that may be hindering ‘out of the box’ thinking and the deployment of artificial intelligence in this area. Second, the paper also discusses some well-known issues ‘within the regulatory box’ around the exercise of discretion in the choice of sustainable technical solutions, the constraints surrounding certain types of complex and collaborative procurement and the difficulties in monitoring contract compliance clauses. Third, the paper arrives at the realisation that the main challenges in delivering and supporting smart urban mobility through procurement relate to the higher-level or cross-cutting challenge of the professionalisation of the procurement workforce and the need to bridge significant (and growing) knowledge gaps, and thus explores existing policy interventions aimed at the professionalisation and networking of procurement officials. The paper concludes with some overall reflections and a call for a more active role by the new Von der Leyen Commission.

Innovation Activities and Integration through Vertical Acquisitions

Abstract We examine the determinants of vertical acquisitions using product text linked to product vocabulary from input-output tables. We find that the innovation stage is important in understanding vertical integration. R&D-intensive firms are less likely to become targets of vertical acquisitions. In contrast, firms with patented innovation are more likely to sell to vertically related buyers. Firms’ R&D intensity is a more important deterrent to their vertical acquisitions when the provision of innovation incentives by potential acquirers is more difficult. The role of patents in fostering vertical acquisitions is more prevalent when potential buyers face a higher risk of holdup. (JEL G32, G34, L22, L25, O34)

Competing trade mechanisms and monotone mechanism choice

We investigate the choice between posted prices and auctions of competing sellers with private valuations. Assuming that buyers face higher hassle costs in auctions, we show the existence of monotone pure strategy equilibria where sellers offer posted prices rather than auctions if and only if they have a sufficiently high reservation value. Posted prices sell with lower probability but yield a larger revenue in case of trade. Using an empirical strategy to compare revenues of posted prices and auctions that takes selling probabilities explicitly into account, we find our theoretical predictions supported by data from eBay auctions on ticket sales for the EURO 2008 European Football Championship.

Institutionalizing area-level risk management: Limitations faced by the private sector in aquaculture improvement projects

Aquaculture improvement projects (AIPs) have emerged as a novel form of market-based sustainability governance. Recognizing that aquaculture production is dependent on public resources, AIPs have been promoted as a mechanism for addressing shared or area-level production risk between farms. However, it remains unclear how different AIP models manage shared risk and at what scale. This article contributes an improved understanding of how AIPs led by NGOs and buyers address risk management at different scales by comparing a ‘top-down basic’ AIP in Vietnam and a ‘bottom-up comprehensive’ AIP in China. The results indicate that AIPs struggle with institutionalizing risk management at an area-level because of the difficulties both NGOs and buyers face in inducing horizontal cooperation to address shared risk between farmers. This is attributed to the poor capacity of these actors to align either top-down or bottom-up comprehensive AIPs with the social and environmental conditions of production. AIPs are more likely to be successful in institutionalizing shared area-level risk management if they build on the existing social networks of farmers. Such an approach means moving beyond dualistic top-down basic and bottom-up comprehensive models to more socially integrative area-based AIP models.