Demand Asymmetry Research Articles

Asymmetries in tourism demand

ABSTRACT This research investigates the impact of key macroeconomic determinants on tourist demand in Greece, focusing on destination competitiveness, income levels, real interest rates, real exchange rate volatility (ERV), trade openness, technology infrastructure, human capital, and travel costs. By introducing a novel index, the study comprehensively evaluates these influences on Greece’s tourist influx over the long term. It also explores the asymmetric long-term impacts of ERV and tourists’ income, highlighting the importance of the direction and size of these effects. The findings are essential for developing effective long-term economic policies to enhance tourism in economies like Greece, where tourism significantly contributes to economic development.

Interaction between manufacturer's wholesale pricing and retailers' price‐matching guarantees

In practice, many retailers employ price‐matching guarantees (PMGs), committing to meet the price of an identical product at a competitor's outlet. Despite the profound linkage between retailers and manufacturers, existing literature has predominantly explored retailers' PMGs without contemplating the influence of manufacturers' wholesale pricing strategies. Employing a supply chain model comprising one manufacturer and two retailers, we scrutinize the implications of wholesale pricing—uniform or discriminatory—on supply chain members and consumers when retailers have the option to extend PMGs. Our analysis uncovers that retailers refrain from offering PMGs when the manufacturer is granted the discretion to set discriminatory wholesale prices—even if such offers align with the manufacturer's preferences. Conversely, under uniform wholesale pricing, PMGs thrive at equilibrium—even if the manufacturer opposes the practice—as long as the degree of demand or cost asymmetry between retailers and average hassle costs remains relatively modest. Although firms' preferences regarding PMGs vary, a Pareto zone exists where all entities prefer that either the efficient retailer under demand asymmetry or the inefficient retailer under cost asymmetry extends the PMG. Despite the potential advantages of PMGs for the more efficient retailer, the enforcement of uniform wholesale pricing diminishes supply chain profit, consumer welfare, and overall social welfare. The detrimental impacts on welfare owing to the imposition of uniform wholesale pricing persist, even amid the presence of hassle costs associated with price matching. Our findings thus instigate a dialogue for policymakers concerning the validity of regulating wholesale pricing when PMGs are in effect.

Selling exclusively or widely? Optimal strategic responses under online platform power asymmetry and competition

AbstractWe study an e‐commerce marketplace consisting of a third‐party seller, a dominant platform, and a competing platform. The seller pays referral fees to sell on the platforms. The dominant platform has a larger consumer base and offers an exclusive program. We formulate a game theoretic model to study strategic responses for all parties involved. The research questions are: How would the seller optimally choose between the two selling options: “go exclusive” with the dominant platform or “go wide” with both the dominant and the competing platforms? How would the dominant platform optimally adjust the referral fee in the exclusive program? How would the competing platform optimally discount the referral fee to compete with the dominant platform? We find that it is optimal for the seller to sell exclusively on the dominant platform if the referral fee adjustment in the exclusive program is lower than a threshold value. For the dominant platform, we identify the optimal value of the referral fee adjustment so that the seller can be enticed to choose the selling strategy that benefits the dominant platform as well. For the competing platform, we prove that there exists an optimal value of the referral fee discount. We also identify the market conditions that it is optimal for the competing platform to discount the referral fee or to set the referral fee the same as the dominant platform. We contribute to the e‐commerce literature by studying exclusive selling and platform competition while incorporating base demand asymmetry and referral fee asymmetry.

Destination choice modeling with spatially distributed constraints

Destination choice models are a key component of any transport and land-use model. Applications in agent-based models allow for destination choice on an individual level including personal variables, like trip purpose, or situational variables. Commonly applied methodologies stem from econometrics, discrete choice theory and utility maximization using either revealed or stated preference data. This paper presents a framework to integrate cross-section flows between distinct geographic areas, which can be obtained from cordon surveys or mobile phone data. Proposed optimization methodology—based on extended shadow price theory—accommodates these complementary data sources as spatially distributed constraints, in addition to the destination capacity constraints such as workplaces. The new generic and robust optimization methodology accounts for constraints as observed on cross-section flows and destination capacities while maintaining econometric choice model theory. As a proof of concept, the suggested methodology is successfully applied in a real-case, agent-based application covering the tri-national Basel region with about 2 million residents, and a large set of 2 · 104 distinct destination alternatives. Due to different wage levels in all three countries and other reasons, the region’s cross-border commuter flows are highly asymmetric. Including data on cross-border flows obtained from a cordon survey, the choice model’s mean deviation declines by 20% and more on a cross-section level and even more so on a choice alternative level, compared to calculations ignoring shadow prices. Moreover, multiple scenario calculations show considerable improvements in planning and forecasting applications. The results demonstrate the suitability and relevance of the proposed approach to optimize destination choice models with limited destination capacities in geographical regions usually characterized by travel demand asymmetries.

Drivers Analysis of Second Oil Crisis Focusing on the Economic Impact of Developing Countries in Asia

As a strategic commodity, oil is essential to the industrial economy and occupies an important position in international competition and national economic development. Price changes in oil affect every aspect of the economic sphere of each country. The three oil crises in history have become major factors in the world oil market prices. Compared with the other two oil crises, the second oil crisis in 1970 was due to the interruption of Iranian oil exports. The market set psychological expectations for the unsteady oil supply, which led to a surge in oil prices. The study of the second oil crisis is of great significance to Asian countries because Asia, as a region of rapid economic development, has an outstanding internal conflict between oil supply and demand, and the causes of the second oil crisis and its impact on the development of Asian countries are also a major concern for countries around the world. This paper examines the characteristics, causes, and manifestations of the second oil crisis from the perspective of industrial policy through case comparison and other methods. Then, this paper finds that the motivations of the second oil crisis are mainly the decline in oil production capacity caused by the Islamic Revolution and countries' oil reserve plans, which exacerbated the oil crisis. The economic impact of the second oil crisis on developing countries in Asia is mainly reflected in the asymmetry of supply and demand, squeezing domestic economic construction funds, and causing a national debt crisis in oil-poor countries in developing countries.

Navigating nature’s benefits to people: an examination of asymmetrical stakeholder preferences for local forest ecosystem services in South Korea

AbstractRecent social and environmental changes complicate the management of the ecosystem services (ES) provided by local forests. Local ES management requires an understanding of the supply–demand dynamics of ES preferences among stakeholders. To examine the supply and demand characteristics of local forest ES in South Korea, we compared the preferences for ES between the ES suppliers and ES users of two local forests (Gariwangsan and Yeoninsan) that differ in jurisdiction, size, ecological properties and management challenges. We surveyed the forest administrators (n = 20) as ES suppliers and local community residents (n = 47) as well as the general public (n = 1000) as ES users. We applied a fuzzy analytic hierarchy process to examine the priority rankings of 10 types of forest ES in order of importance in management perceived by forest administrators and local residents. The general public’s preferences were measured using the weighted sums of each type of ES ranked based on its perceived importance. We also interviewed the forest administrators and local residents to further explore how the local context of the examined forests might have affected their ES evaluation. The results show that forest administrators and the general public prioritize regulating services while the local community opts for cultural services. Moreover, local residents in close proximity to the forests prefer provisioning services while those farther away prefer regulating services. Considering these differences in stakeholder preferences for local forest ES, local forest management policies can benefit from inclusive decision-making processes to navigate the supply–demand asymmetry.

Vehicle Redistribution in Ride-Sourcing Markets Using Convex Minimum Cost Flows

Ride-sourcing platforms often face imbalances in the demand and supply of rides across areas in their operating road-networks. As such, dynamic pricing methods have been used to mediate these demand asymmetries through surge price multipliers, thus incentivising higher driver participation in the market. However, the anticipated commercialisation of autonomous vehicles could transform the current ride-sourcing platforms to fleet operators. The absence of human drivers fosters the need for empty vehicle management to address any vehicle supply deficiencies. Proactive redistribution using integer programming and demand predictive models have been proposed in research to address this problem. A shortcoming of existing models, however, is that they ignore the market structure and underlying customer choice behaviour. As such, current models do not capture the real value of redistribution. To resolve this, we formulate the vehicle redistribution problem as a non-linear minimum cost flow problem which accounts for the relationship of supply and demand of rides, by assuming a customer discrete choice model and a market structure. We demonstrate that this model can have a convex domain, and we introduce an edge splitting algorithm to solve a transformed convex minimum cost flow problem for vehicle redistribution. By testing our model using simulation, we show that our redistribution algorithm can decrease wait times by more than 50%, increase profit up to 10% with less than 20% increase in vehicle mileage. Our findings outline that the value of redistribution is contingent on localised market structure and customer behaviour.

Impacts of oil shocks on the EU carbon emissions allowances under different market conditions

This study tests the effects of oil shocks on the returns of the European Union's carbon emission allowance (EUA) under different market conditions by using a quantile regression method. Furthermore, the research looks into whether the link between oil shocks and the returns of the EUA has any asymmetry or lagged effects. The results show that oil supply and demand shocks have a positive effect on the returns of the EUA, but oil risk shocks have a negative effect. Meanwhile, oil shocks tend to be stronger under bearish and normal market conditions. Moreover, we find the asymmetry of oil demand and risk shocks is more clearly reflected in bearish market conditions. However, the asymmetry of oil supply shocks is more reflected in bullish market conditions. Finally, we discover the lagged effect between oil demand and risk shocks is significant at lag one trading day and weakens or disappears at other lags. But the lagged impact of oil supply shocks is significant for lag one trading day in a bearish market and normal market conditions but significant at lag eight trading days in bullish market conditions.

The evolution, usage and trip patterns of taxis & ridesourcing services: evidence from 2001, 2009 & 2017 US National Household Travel Survey

Given the rapid adoption of ridesourcing services (RS), it is critical for transportation planners and policymakers to understand their impacts and keep policies up to date. This study contributes to the literature by using representative samples captured in the 2001, 2009 and 2017 National Household Travel Surveys to explore how taxis and ridesourcing (T/R) services have evolved and shaped people’s travel behavior pre- and post-disruption at the US national level. It characterizes and visualizes the asymmetries in demand spatially and temporally for T/R trips, showing that ridesourcing has greatly increased T/R trips from flexible and optional activity locations to home, which vary by times of day. It also characterizes tours involving T/R services, showing that while simple optional tours (such as home–recreation–home) represent the largest share of tours involving T/R, the fastest growth has been in simple mandatory tours (such as home–work–home). Tours involving T/R grew from 0.4% of all tours in 2009 to 1% of all tours in 2017, mostly within densely populated and transit-oriented regions. Although less than 1% of T/R trips involved a direct transfer to or from transit, one-third of all tours containing T/R also included transit. However, at the same time, 40% of T/R-containing tours also involved auto trip(s). Overall, this study reveals the complex relationships among their underlying sociodemographic characteristics, RS adoption and usage behavior, and daily tour patterns.

Competition between different groundwater uses under water scarcity

We study groundwater management under a regime shock affecting water availability, using a dynamic common-property resource game. The different players correspond to different groundwater uses (irrigation or urban water supply), enabling us to consider competition between economic sectors for the stock with limited availability. The players have different water demand functions and, under certain circumstances depending on the shock, different discount rates. The effects of asymmetries in both demand and discount rates are analyzed, comparing cooperative and non-cooperative solutions. A numerical analysis for the particular case of the Western La Mancha aquifer in Spain is conducted to analyze the degree of inefficiency of non-cooperative solutions with respect to cooperative solutions in terms of welfare. We show that a higher asymmetry in discount rates reduces the inefficiency of non-cooperative solutions. The opposite result is obtained when considering the asymmetry in demand.

Labour mobility as an adjustment mechanism to asymmetric shocks in Europe: evidence from the Czech Republic, Hungary, Poland and Slovakia

This paper assesses the nature and correlation of shocks in Visegrad countries and investigates the role of labour mobility in the process of adjustment to the effects of asymmetric shocks. Structural vector autoregression (SVAR) models are employed to assess the nature and correlation of shocks while dynamic cointegrated panel autoregressive distributed lag (ARDL) models are used to determine the role of labour mobility in the adjustment process. The dataset for the SVAR models is quarterly time series and covers the period 2000–2020. The dataset for the cointegrated panel ARDL models is annual and covers the period 2000–2019. The results show more asymmetries in external supply, domestic supply, demand and monetary shocks before the financial crisis. The findings also show that more symmetries occurred in Visegrad countries after the financial crisis in relation to external and domestic supply shocks. Asymmetries persisted with regard to demand and monetary shocks after the financial crisis. With labour mobility as an adjustment mechanism to asymmetric shocks, the paper finds that the capacity of labour mobility is very low. The percentage of net migration in the total population is less than 1% in the four countries compared to 15% in the United States. The size of the adjustment coefficients shows that it takes 3–5 years for countries to adjust to asymmetric shocks through labour mobility.

Települési vízgazdálkodásunk finanszírozási rendszere a 2021–2027 közötti pályázati ciklus tükrében

A víz egyre élesebb biztonsági deficitként jelenik meg a föld lakosságának preferenciarendszerében. Közgazdasági szempontból is jelentős potenciállal rendelkeznek azon országok, ahol a vízzel megfelelően gazdálkodnak. Az éghajlatváltozás következtében a hozzáférhető édesvízkészletek tekintetében fokozódó nyomás nehezedik Magyarországra, és több régióban is a kereslet és a kínálat aszimmetriája figyelhető meg. Az egyre szélsőségesebb időjárási jelenségek negatív hatással vannak a vízellátásra. Az időben és térben váltó vízkészletek közép- és hosszútávon jelentős negatív hatással vannak a környezetbiztonságra, és össztársadalmi szinten is éreztetik hatásukat. A szélsőségeknek való kitettség pedig korlátozza Magyarország versenyképességét, gazdasági stabilitását. A különböző gazdasági ágazatok vízigénye miatt egyre kiélezettebb verseny folyik a vízért, mint erőforrásért, miközben nemcsak vízkészleteink mennyiségét, hanem minőségét is óvnunk kell. Településeink még inkább kitettek, sérülékenyebbek az éghajlatváltozás hatásainak, ezeken a területeken koncentrálódik a népesség és a gazdasági tevékenység többsége, és a városok sok esetben a klímaváltozás szempontjából érzékeny (például árvízzel vagy belvízzel, aszállyal veszélyeztetett) területeken helyezkednek el. A városi vízrendszer – amely magába foglalja az ivóvízellátó rendszert, a szennyvíz-, a csapadékvízelvezető és tisztító rendszert – különösen veszélyeztetett, mivel az éghajlatváltozás főleg a víz körforgásának megváltozásában nyilvánul meg (Buzás, 2015). Az Országos Vízügyi Főigazgatóság tevékenység-portfóliójában új elemként jelenik meg a települési vízgazdálkodás, csapadékvíz-gazdálkodás. A Belügyminisztérium fontos ágazataként szükséges a téma napirendre tűzése. A települési vízgazdálkodást, csapadék-vízgazdálkodást megalapozó műszaki, gazdasági és jogi keretek kidolgozása kiemelt feladat a magyar vízügyi igazgatás számára. A feladatok, az általános célkitűzések között szerepel a valós és tényleges digitális alapokon nyugvó vízgazdálkodás továbberősítése, illeszkedve a Nemzeti Vízstratégiában (Kvassay Jenő Terv) nevesített célállapotok eléréséhez. A települési csapadékvíz-gazdálkodás területén különösen fontosak a megelőző intézkedések (legyen szó akár szerkezeti vagy nem szerkezeti intézkedésről). A fejlesztések tervezése során fontos a vizek helyben tartásának lehetőség szerinti megvalósítása olyan tározók építésével, amelyek alkalmasak mind a rendkívüli áradások, felhőszakadások kártételei elleni védekezésre, mind a lokális vízvisszatartásra, jóléti és ökológiai célokat, hasznosításokat is támogatva, amennyiben azok nem szorítják háttérbe a tározók alapvető funkcióját. A tanulmány célja, hogy bemutassa a vízügyi ágazat által elkészített nem szerkezeti intézkedéseket, illetve az önkormányzatok esetében összefoglalja a 2016 és 2019 között – országos szinten – megvalósult és folyamatban lévő kockázatcsökkentő települési vízgazdálkodással, települési csapadékvíz-gazdálkodással összefüggő beruházásokat, illetve javaslatokat fogalmazzon meg a 2021–2027 közötti időszak forrásfelhasználására.

How Concerned Should We Be About Algorithmic Tacit Collusion? Comments on Calvano et al.

A recent study by four economists (Calvano et al, 2019) has undoubtedly refueled the public and academic interest in algorithmic tacit collusion. In this study, the researchers find that their “algorithms consistently learn to charge supra-competitive prices, without communicating with one another… this finding is robust to asymmetries in cost or demand, changes in the number of players, and various forms of uncertainty.” Not surprisingly, this research has since been reported in a number of outlets including the Wall Street Journal, Financial Times, MIT Tech Review, among others. What does the study say about the likelihood of algorithmic collusion in the real world? Does it fundamentally change how we should think about tacit collusion in general? These are the questions I address in this note.

Crosstalk-Aware Counter-Propagating Core Assignment to Reduce Inter-Core Crosstalk and Capacity Wastage in Multi-Core Fiber Optical Networks

Inter-core crosstalk causes serious signal impairment in a multi-core fiber (MCF) optical network. With the extensive usage of data centers, traffic demands become increasingly asymmetric, leading to significant overall capacity wastage if the network is designed with bidirectional links. To alleviate these effects in an MCF optical network, we consider assigning the fiber cores asymmetrically, in a counter-propagating manner. This not only reduces the inter-core crosstalk between counter-propagating fiber cores significantly but also allows the flexibility of assigning different numbers of fiber cores in the opposite directions of a fiber link, thereby avoiding network capacity wastage arising from bidirectional traffic demand asymmetry. To evaluate the benefits of the proposed strategy, we consider the routing, spectrum, and core assignment (RSCA) problem for the MCF optical network. An integer linear programming (ILP) model and an auxiliary graph based heuristic algorithm are developed to optimize network spectrum resource utilization. Simulation studies show the effectiveness of the proposed crosstalk-aware core counter-propagation strategy, which can significantly outperform its counterpart, i.e., the co-propagation scheme, in terms of the total number of MCFs used and average inter-core crosstalk. In addition, the proposed RSCA heuristic algorithm is efficient to perform close to the ILP model, which can minimize the number of MCFs used and crosstalk between neighboring cores.

Spatial differentiation and network externality in pricing mechanism of online car hailing platform

In order to eliminate the information asymmetry of supply and demand in transport service market, online car hailing platforms appear recent years. Almost all the transport service markets have the property of spatial differentiation, i.e, passengers' demand and vehicle supply are subject to different distributions in different regions at different time. Under the framework of two-sided market theory, this paper develops an intermediary pricing model for transport service market to evaluate the impact of spatial differentiation and network externality on online car hailing platform's pricing mechanism, based on the analysis of transport services' supply-demand matching. The analytic solution shows that the optimal price of the online car hailing platform is decided by the degree of heterogeneity in customer valuation on demand side and driver cost on supply side. Given optimal price on demand side, supply price in a region directly determines the supply of transport service in the same region, has cross effect on the supply in other region, and has indirect effect on demand price through the aggregate supply. Based on the trip record data of New York City, the simulation shows that online car hailing platform try to customize higher prices to attract more drivers and alleviate the passengers' demand pressure in morning rush hour. Furthermore, the simulation also shows that the disparity of the flow density in adjacent areas may affect the price adjustment mechanism of the online car hailing platform, and if the regional disparity further expands, the optimal choice of the platform is to increase the price of supply side, rather than the demand side.

Organic Mergers and Acquisitions

This paper examines the competition between organic and non-organic firms, their incentives to undertake a horizontal merger, and the effect of mergers on firms’ market shares. We also consider an alternative setting where one firm can acquire its rival. For generality, we allow for product differentiation, demand, and cost asymmetries. Our results show that both organic and non-organic firms, despite their cost asymmetries and demand differentials, have incentives to merge under large conditions. When demand and cost differentials are significant, we identify settings under which a firm (either organic or non-organic) purchases its rival, to subsequently shut it down, and yet increase its profits. We then study under which conditions the merger can be welfare improving, which is more likely when goods are highly differentiated and their production costs are relatively symmetric.

Artificial Intelligence, Algorithmic Pricing, and Collusion

Increasingly, algorithms are supplanting human decision-makers in pricing goods and services. To analyze the possible consequences, we study experimentally the behavior of algorithms powered by Artificial Intelligence (Q-learning) in a workhorse oligopoly model of repeated price competition. We find that the algorithms consistently learn to charge supracompetitive prices, without communicating with one another. The high prices are sustained by collusive strategies with a finite phase of punishment followed by a gradual return to cooperation. This finding is robust to asymmetries in cost or demand, changes in the number of players, and various forms of uncertainty. (JEL D21, D43, D83, L12, L13)

Analyzing the Potential of User-Based Relocations on a Free-Floating Carsharing System in Cologne

Abstract Free-floating carsharing (FFCS) concepts have gained popularity in recent years and offer a maximum level of flexibility for the user, while the operator is confronted with spatiotemporal demand asymmetries. To offer an appropriate level of service in areas with high demand, the operator has to relocate the vehicles. Those transfers are often executed during the day to optimally supply the high demand during peak hours. The transfers are limited by both budget and capacity constraints. Therefore, it would be beneficial to support the fleet rebalancing by user-based relocations. In this paper, an FFCS system in Cologne is analyzed where the operator has introduced a special incentive system in August 2017. The operator created the possibility to reward customers for the relocation of cars from the peripheral to the central area with up to 20 bonus minutes. This study evaluates the effectiveness of this measure by comparing rental data sets from two periods of 6 weeks each: one period before and one period after the new incentive system was applied. Results show that idle times in the peripheral area can be reduced significantly and customers can be influenced to return a vehicle in a desired area.

Who Benefits From Banning Discriminatory Wholesale Pricing When Retailers Can Price Match?

In practice, numerous retailers are implementing price-matching guarantees (PMGs) whereby they promise to match the price of an identical product at a competing retailer. Despite strong connection between retailers and manufacturer, however, the literature has extensively studied retailers' PMGs without considering the manufacturers' wholesale pricing. Using a supply chain model with one manufacturer and two asymmetric retailers, we explore the impacts of wholesale pricing, either uniform or discriminatory wholesale pricing, on supply chain firms and consumers when retailers can offer PMGs. Our analysis reveals that retailers do not offer PMGs when the manufacturer is allowed to wholesale price discriminate. However, under uniform wholesale pricing, PMGs prevail at equilibrium as long as the degree of demand or cost asymmetry between the retailers and the average hassle costs are small. While firms' preferences of PMGs differ, there exists a Pareto zone wherein all firms prefer that the efficient retailer under demand asymmetry or the inefficient retailer under cost-asymmetry offers the PMG. Despite the potential benefits of PMG to the efficient retailer, enforcing uniform wholesale pricing reduces supply chain profit, consumer welfare, and social welfare. Compared to discriminatory wholesale pricing, uniform wholesale pricing is more likely to hurt consumer welfare and social welfare under cost asymmetry than under demand asymmetry. The welfare reducing effects of enforcing uniform wholesale pricing continue to hold steady under two-part tariff and quantity discount wholesale pricing. Our findings open a debate by policymakers on whether it is appropriate to regulating wholesale pricing in the presence of PMGs.

Asymmetries in labor demand: Do loss aversion and endowment effects affect labor demand elasticities on the establishment level?

Asymmetries in labor demand: Do loss aversion and endowment effects affect labor demand elasticities on the establishment level?