Buyer's Valuation Research Articles

Optimal finite horizon bargaining mechanisms with refusal cost

This paper considers a bargaining problem under asymmetric information between a seller and multiple buyers for selling given perishable items over a finite period. It is assumed that the seller faces a refusal cost if the item does not get sold. The problem is modelled as a Markov decision process that endogenises the marginal inventory valuation of the seller. This paper compares four bilateral bargaining mechanisms namely seller posting price, buyer posting price, difference splitting between seller's and buyer's valuation, and negotiation. For low refusal cost, the seller prefers posting price and splitting the difference between both valuations when he is in strong and weak positions, respectively. For high cost, the seller is indifferent between negotiation and buyer's posting. Also, this paper compares bargaining mechanisms and dynamic pricing with and without the refusal cost. This paper conducts simulation experiments to validate the findings of the model.

A Model of Panic Buying and Workforce under COVID-19.

Allowing there to be an undersupply of medical resources and infection amid the social workforce, this paper proposes a theory to show how panic buying is induced and how bad the workforce status could be. By developing a novel general equilibrium model, we find that for any retail price that is higher than the buyer's reserve value, the buying competition will be induced and the medical resources supply will further be tightened. Moreover, if the transmission rate of COVID-19 surpasses the theoretical threshold that is proposed by this paper, the whole workforce in our simulated economy will inevitably be infected.

Impact of Forest Landscape on the Price of Development Plots in the Otwock Region, Poland

Building plots, understood as land properties intended for development, are an important object of commercial transactions. Their prices are determined by several factors, such as location, state of development, distance from important urban centres, and proximity to green areas. It is certain that, especially with regard to building plots intended for single-family housing, the proximity of natural areas, especially forest areas, is becoming increasingly important. The Otwock region, with a forest cover of more than 30%, has numerous undeveloped lands that are or could be development plots. This article concerns an analysis of transactions involving undeveloped development land of selected communes in the Otwock region. On the basis of an analysis of prices of real estate transactions from 2011 to 2016 from four municipalities of the Otwock region and a spatial visualisation of the plots, the relationship of price (m2) with physical characteristics (technical development, shape, area), distance from a large city (Warsaw), and distance from a railroad line stop and landscape values (landscape type, distance to the forest, number of landscape components) was determined. Statistical analyses used regression and correlation analysis. The preferences of 519 people interested in buying/selling real estate in the Otwock region were also investigated, and for this purpose, we cooperated with real estate offices and municipal offices. The results of the survey strongly indicate that forest landscapes increase the attractiveness of building plots, which in turn leads to higher prices on the market. The results of the study show that there is a relationship between the price of a property and its distance to the forest, the nature of the forest boundary, and the number of landscape elements. The forest landscape is one of the most important factors determining the attractiveness of a building plot. Proximity to a forest, especially forests under a form of protection, is an important value for prospective land plot buyers. The views of respondents varied considerably due to socio-demographic characteristics, mainly the age and education of respondents.

The bargaining trap

I revisit the Rubinstein (1982) model for the classic problem of price haggling and show that bargaining can become a “trap,” where equilibrium leaves one party strictly worse off than if no transaction took place (e.g., the equilibrium price exceeds a buyer's valuation). This arises when one party is impatient about capturing zero surplus (e.g., Rubinstein's example of fixed bargaining costs). Augmenting the protocol with costless unilateral exit options for responding bargainers generally removes the trap.

Price skimming: Commitment and delay in bargaining with outside option

This paper studies a bargaining problem in which the buyer's valuation and outside option are private information. We show that there exists a non-stationary equilibrium in which the seller can secure full commitment profit (from the optimal sales mechanism that exhibits price skimming) if and only if the buyer's outside option takes a zero value with positive probability (non-negligibly zero outside option). Our innovation is to show that (i) both the Coasean reversion and positive selection are necessary for the seller to secure the full commitment profit and (ii) the Coasean equilibria may coexist with positive selection despite their claimed incompatibility if the non-negligibly zero outside option exists.

Not all subsidies are equal: measuring preferences for electric vehicle financial incentives

Financial incentives, such as purchase subsidies, have been found to increase plug-in electric vehicle (PEV) adoption, but how these incentives are designed can impact their effectiveness as well as how equitably they are distributed. Using a national conjoint survey (N = 2170 respondents), we quantify how U.S. vehicle buyers value different features of PEV financial incentives. Participants overwhelmingly prefer immediate rebates, on average valuing them by $580, $1450, and $2630 more than sales tax exemptions, tax credits, or tax deductions, respectively. These effects are significantly larger for lower-income households, used vehicle buyers, and buyers with lower budgets. We estimate that on average $2 billion could have been saved if the federal subsidy available between 2011 and 2019 were delivered as an immediate rebate instead of a tax credit, or $1440 per PEV sold. Our results suggest that structuring incentives as immediate rebates would deliver a greater value to customers and would be more equitably distributed compared to the current tax credit scheme.

MEETINGS AND MECHANISMS

AbstractThis article shows how meeting frictions affect equilibrium trading mechanisms and allocations in an environment where identical sellers post mechanisms to compete for buyers with ex ante heterogeneous private valuations. Multiple submarkets can emerge, each consisting of all sellers posting a particular mechanism and the buyers who visit those sellers. Under mild conditions, high‐valuation buyers are all located in the same submarket, and low valuation buyers can be in: (i) the same submarket, (ii) a different submarket, and (iii) a mixture of (i) and (ii). The decentralized equilibrium is efficient when sellers can post auctions with reserve prices or entry fees.

RESULTS OF FORCED «UPGRADE» OF ELECTRONIC COMMERCE

The article examines the transformation of e-commerce, which has become an integral part of the global retail system over the past five years. Challenges looming for this area of business have been identified, as consumers have become more cautious in their spending due to inflation, the effects of the war in Ukraine, supply chain disruptions and a general sense of uncertainty. It is noted that business structures, trying to survive in the existing conditions, transform into new business forms and look for new forms of product promotion. The work shows that in practice these actions are not always effective. The «upgrade» of the Prom.ua trading platform was studied in detail – the innovative ProSale catalog, which is a tool for displaying and promoting goods on Prom and whose main goal is to attract buyers and increase sales. Prom's developers are shown to have required all but industrial customers to use the CPA Model, which assumes a single sales payout rate that is the same for all products in a given category. And most importantly, the client lost influence over the frequency and priority of issuing their goods in the ProSale Catalog. According to the data of the authors' own research, it was established that the number of customers registered on the marketplace after the forced «upgrade» decreased by 6% only in June-July. Of course, this happened under the combined influence of various factors, but the study showed that changes in the promotion of goods on Prom have a significant impact on this, and customers selling on Prom experienced a sharp decrease in the number of impressions (issues in categories) in the ProSale Catalog. The situation is shown when the seller got into a circle from which it is very difficult to get out. An explanation has been provided as to why: it is the store rating that now plays an important role in issuing ProSale Catalog products for both new sellers and «advanced» sellers on the platform. Recommendations for the Prom marketplace have been developed: bring back CPS advertising and thereby create healthy competition between sellers on the platform. Expected: value for the platform – increase in profit due to the purchase of accommodation packages, increase in spending among users on advertising services; value for the seller – increased sales and a corresponding increase in profit; value for buyers – a reduction in the prices of goods and, accordingly, the opportunity to make a larger number of purchases.

Analisis Loyalitas Konsumen pada Kedai Kopi di Kecamatan Kuta Alam Banda Aceh

This study was conducted to determine consumer loyalty in consuming products at coffee shops in Kuta Alam District. The type of data used in this study is primary data, namely data obtained from the first party who is directly involved with the problem to be discussed. Primary data were obtained through interviews with coffee shop consumers. The analytical model used is the Loyalty Pyramid Concept. The results in the study can be concluded that the value of committed buyers is 87,27% greater than the value of switcher buyers 56,36%, it can be said that the coffee shop consumers are loyal. So, based on the loyalty pyramid, consumers of coffee shops in Kuta Alam District are loyal buyers, which means that consumers there will repurchase, buy more products and recommend products to others.

Rethinking the M&A process: Learning private equity’s secret to outperforming corporate strategic acquirers

PurposeAlthough M&A transactions often destroy shareholder value for corporate strategic buyers, PE firms, whose business model is predicated upon repeating M&A, have a better record of creating value for their investors.Design/methodology/approachThe critical aspects that comprise the PE playbook are organized around the three main deal phases Pre-deal, Deal and Post-deal.FindingsResearch has found that 60 percent of surveyed strategic buyer executives indicated their companies do not have a comprehensive end-to-end M&A approach using a playbook.Practical/implicationsAmple evidence exists demonstrating that corporate strategic buyers experience significant difficulty in creating value from their transactions.Originality/valueThough many view PE firms as value-destroyers, various peer-reviewed studies have found that PE-backed firms have a surprisingly favorable record.

The contextualized system of determining the smart online business development

Based on the analysis of today’s tendencies and trends, as well as considering the transformational shifts in the business Internet field due to COVID-19 and total digitalization, the value of implementing a smart online business development system is proven. It requires the implementation of a process approach and business processes customization for creating maximum buyers value. According to the results of generalization and systematization of data from leading scientists and economists, specialists in online retail, it is established that the problem of developing a smart system for managing and developing business in the online environment is still fragmentarily studied. Considering the above, the purpose of the study is to develop an online business smart development system that is congruent to the context and allows to comprehensively assess and analyze aspects of product, pricing, communication, sales and logistics activities, as well as make justified management decisions. To achieve the purpose, it is used general scientific approaches and methods: complex and structural approaches; methods of system analysis and synthesis, visualization method; special analysis methods, among which logical, economic-mathematical and comparative; method of expert evaluations. For the study, it is selected 21 online stores of the biggest Ukrainian retailers divided into three clusters. It is developed the contextualized system for determining the smart online business development (CSDSOBD), which includes product, price, communication, sales and logistics substantial subsystems. It is a complex multi-aspect system representing cyclic-continuous and discrete-linear connections and relations between retailers and buyers in the online environment. The specificity the CSDSOBD – the communication polysubjectivity and managerial decisions polyvariability based on the online buyers’ interactivity features with a symbiosis of the economic and social orientation of the strategic the enterprises’ goals. The CSDSOBD foundation – existential management of substantial subsystems based on stochastic fluctuations in the parameters of the external environment and its influence on the online buyers’ behavior. The CSDSOBD key competitive advantage – coherent mechanism for determining the online business smart development in a fluctuating marketing environment. It is proposed the scientific and methodical approach to identify the CSDSOBD development focus consists in determining the level of development of the substantial subsystems based on the results of quantitative and qualitative assessments of the relevant metrics. After approbation of the approach, the recommended measures to improve of the CSDSOBD substantial subsystems level development for retailers are presented. The identification of the CSDSOBD development focus is carried out after a comprehensive assessment of the development level of each substantive subsystem. Taking into account the obtained results, it is formulated the activities and measures to improve the efficiency of retailers’ online businesses and make long-term sustainable benefits.

Exploring the Influence of Supply Chain Relationship Commitment and Loyalty in F&B Industry

Abstract Recently, supply chain management (SCM)has been receiving increasing attention from the industry. Most of the current research is focused on the high-tech industry and very little research has focused on SCM topics in the food and beverage (F&B) industry. In Taiwan, as the F&B industry is highly competitive, maintaining and building strong relationships with suppliers of ingredients or tableware is a way to maintain a competitive edge. Therefore, maintaining and building strong relationships with suppliers of ingredients or tableware required for restaurant operations is a way to maintain a competitive advantage. In addition, the perceived value, relationship commitment, satisfaction, switching costs and loyalty of supply chain buyers in the F&B industry is a matter that researchers want to probe when developing an ongoing understanding of SCM in the F&B industry. It has been discovered that the supplier-buyer relationships, when it comes to buyer perceived value and relationship commitment, increase customer satisfaction and increase switching costs as well as positively impact loyalty to the F&B supply chain seller. Therefore, in the rapidly dynamic business environment of the F&B industry, establishing an effective SCM system for the F&B industry can indeed enhance a company's competitive advantage. JEL classification numbers: L10. Keywords: Perceived value, Relationship commitment, Satisfaction, Loyalty.

Identification in ascending auctions, with an application to digital rights management

This study provides new identification and estimation results for ascending (traditional English or online) auctions with unobserved auction‐level heterogeneity and an unknown number of bidders. When the seller's reserve price and two order statistics of bids are observed, we derive conditions under which the distributions of buyer valuations, unobserved heterogeneity, and number of participants are point identified. We also derive conditions for point identification in cases where reserve prices are binding and present general conditions for partial identification. We propose a nonparametric maximum likelihood approach for estimation and inference. We apply our approach to the online market for used iPhones and analyze the effects of recent regulatory changes banning consumers from circumventing digital rights management technologies used to lock phones to service providers. We find that buyer valuations for unlocked phones dropped by 39% on average after the unlocking ban took effect, from $231.30 to $141.50.

Buyer's Bankruptcy Risk, Sourcing Strategy, and Firm Value: Evidence from the Supplier Protection Act

Buyer's Bankruptcy Risk, Sourcing Strategy, and Firm Value: Evidence from the Supplier Protection Act

Analysis of Rice Consumer Loyalty in Pekanbaru City

This study aims to determine the loyalty of consumers who buy rice in Pekanbaru City. The method used is the survey method for households in Pekanbaru City, which consists of 12 Districts which are divided proportionally based on BPS data in 2020. The sample in this study is 240 households, based on the field survey results obtained for consumer characteristics are at 84.00% of the productive age ranges from 15 - 35 years old. For educational characteristics, 63.41% of undergraduate consumer education (S1) covers various fields of science. Then for the characteristics of income, it is found that as much as 6.92% of consumer income is 2,888,564 or equivalent to MSEs. Whereas for the type of work obtained as many as 57.4% have a livelihood / job as private employees. Meanwhile, the results of the analysis of consumer loyalty are not yet at the level of loyal buyers because the loyalty pyramid value of Switcher buyers is still above 50% and the value of committed buyers is still very small, namely 26.67%. The level of loyalty of rice consumers in the city of Pekanbaru is not yet at the level of loyal buyers because in the loyalty pyramid the value of Switcher buyers is still above 63%, which is 56.61% with the frequent category and the committed buyer value is also very small, namely 49.72% with the non-category. like, for the value of Liking The Brand and Satisfied Buyer, which is 100% with the very satisfied category. And the Habitual Buyer value is 96.66% with the category agree.

Satisfactory listening: The differential role of salesperson communication in (co)creating value for B2B buyers

The importance of communication skills of the salesperson (SP) on buyer satisfaction is fait accompli. However, how various facets of listening, along with the core components of SP's communication (i.e., content and diligence) contribute to the value creation process is poorly understood. The current research presents a conceptual framework to explain these effects and tests the model empirically. The authors conceptualize a framework for how critical aspects of SP's communication with customers differentially influence imagery versus transactional value creation. This process is explained with an application of the dual process theory. Partial least squares structural equation modeling (PLS-SEM) is employed to examine the theorized pathways within a sample of buyers of a large manufacturing firm in the United States. Results exhibit that while various facets of listening differentially contribute to the two value types, the core aspects of SP's communication mainly affect transactional value creation. Theoretical contributions and managerial implications are discussed.

Strategic Shirking in Bilateral Trade*

AbstractIn this paper, I study bilateral trade, where the seller can undertake specific investments before the binary trade transaction takes place. I identify a novel reason for hold‐up and contractual inefficiency in this canonical setting. The investing party can shirk for strategic reasons; that is, exert an effort so low that trade becomes inefficient and is being rescinded. Under a fixed‐price contract (the second‐best mechanism in the absence of the shirking problem), strategic shirking can arise regardless of the initially contracted trade price. Moreover, if a fixed‐price contract leads to strategic shirking, there exists no general revelation mechanism to restore equilibrium trade. I show that the shirking problem is more severe when the parties trade after having learned the buyer's valuation, as opposed to the case of an “experience good” where trade is finalized before this information materializes. Finally, when both buyer and seller undertake specific investments, shirking and non‐shirking equilibria are shown to coexist.

Urgensi Lingkungan Bisnis Dan Strategi Dalam Menciptakan Keunggulan Kompetitif

This study has several main objectives as follows: (1) To explore how SMEs develop strategies based on their strengths, weaknesses, opportunities, and challenges. (2) Explore the various efforts of SMEs in anticipating the uncertainty of the business environment. (3) Exporting the efforts of SMEs to formulate their competitive strategies. (4) Exploring how environmental uncertainty affects the choice of a SMEs competitive strategy. (5) Explore the efforts of SMEs to formulate their operational strategies. (6) Exploring how competitive strategy affects SME operational strategies. (7) Exploring how competitive strategy and operating strategy affects SMEs business performance. This study uses a descriptive research approach that seeks to identify and map (mapping) the potential and characteristics of SMEs in Surabaya and its surroundings (Sidoarjo, Gresik) with the aim of obtaining an accurate and detailed descirption of the potential characteristics of small and medium enterprises in the Surabaya area and surroundings. Based on the phenomena found in this study, there are several things that can be underlined: uncertainty in the business environment does not affect the company’s business strategy. In carrying out their business strategy, SMEs usually use the following strategis: (1) Concering the development of skills to respond to the opportunities created by companies in the first market. What often happens is that many imitators improve or modify goods and services to create higher value for buyers. If so, entrepreneurs need to shift their competitiveness to other market segments by dominating small market segments that large companies sess as having no oppurtunity. (2) Changes in product, market, or industry characteristics based on innovation. This strategy is carried out by changing existing products and services, for example changing benefits, values, and other economic characteristics.

Analysis of Rice Consumer Loyalty in Pekanbaru City

This study aims to determine the loyalty of consumers who buy rice in Pekanbaru City. The method used is the survey method for households in Pekanbaru City, which consists of 12 Districts which are divided proportionally based on BPS data in 2020. The sample in this study is 240 households, based on the field survey results obtained for consumer characteristics are at 84.00% of the productive age ranges from 15 - 35 years old. For educational characteristics, 63.41% of undergraduate consumer education (S1) covers various fields of science. Then for the characteristics of income, it is found that as much as 6.92% of consumer income is 2,888,564 or equivalent to MSEs. Whereas for the type of work obtained as many as 57.4% have a livelihood / job as private employees. Meanwhile, the results of the analysis of consumer loyalty are not yet at the level of loyal buyers because the loyalty pyramid value of Switcher buyers is still above 50% and the value of committed buyers is still very small, namely 26.67%. The level of loyalty of rice consumers in the city of Pekanbaru is not yet at the level of loyal buyers because in the loyalty pyramid the value of Switcher buyers is still above 63%, which is 56.61% with the frequent category and the committed buyer value is also very small, namely 49.72% with the non-category. like, for the value of Liking The Brand and Satisfied Buyer, which is 100% with the very satisfied category. And the Habitual Buyer value is 96.66% with the category agree.

Infinite-Dimensional Fisher Markets: Equilibrium, Duality and Optimization

This paper considers a linear Fisher market with n buyers and a continuum of items. In order to compute market equilibria, we introduce (infinite-dimensional) convex programs over Banach spaces, thereby generalizing the Eisenberg-Gale convex program and its dual. Regarding the new convex programs, we establish existence of optimal solutions, KKT conditions, as well as strong duality. All these properties are established via non-standard arguments, which circumvent the limitations of duality theory in optimization over infinite-dimensional vector spaces. Furthermore, we show that there exists a pure equilibrium allocation, i.e., a division of the item space. Similar to the finite-dimensional case, a market equilibrium under the infinite-dimensional Fisher market is Pareto optimal, envy-free and proportional. We also show how to obtain the (a.e. unique) equilibrium prices and a pure equilibrium allocation from the (unique) equilibrium utility prices. When the item space is the unit interval [0,1] and buyers have piecewise linear utilities, we show that approximate equilibrium prices can be computed in polynomial time. This is achieved by solving a finite-dimensional convex program using the ellipsoid method. To this end, we give nontrivial and efficient subgradient and separation oracles. For general buyer valuations, we propose computing market equilibrium using stochastic dual averaging, which finds approximate equilibrium prices with high probability.