Optimal Technology Investment Research Articles

To Share or Not to Share? The Optimal Technology Investment in a Virtual Product Supply Chain

With the rapid rise of the virtual economy, the “brand + platform” virtual product distribution model led by virtual technology platforms has emerged, bringing a series of new virtual experiences to consumers. Considering that consumers have heterogeneous preferences for virtual technologies, we investigate a virtual product supply chain consisting of a brand owner, a virtual technology platform, and consumers (where the virtual technology platform has superior information about consumer preferences). We develop a signaling game model with preference information signaled by the virtual technology investment to study the optimal information-sharing strategy for the virtual product supply chain. We find that the virtual technology platform always prefers information sharing without paying any signaling cost. Moreover, we also observe that the brand owner and the platform can achieve alignment, that is, when consumers are more likely to prefer virtual technology, both the brand owner and the virtual technology platform are better off if the virtual technology platform chooses to share information with the brand owner. Finally, we analyze the consumer welfare and find that when consumers are moderately likely to prefer virtual technology, consumers can gain more benefits in the information-sharing scenario.

Sustainable supply chain management considering technology investments and government intervention

With the aggravation of the global environmental crisis, consumers are keen to use green products, and enterprises are more committed to technology investment and innovation to meet consumers’ green preferences. This study considers a supply chain system composed of one manufacturer and one retailer, where the manufacturer invests in green emission reduction technology (GERT) to reduce carbon emissions, and the retailer invests in information disclosure technology to transmit the higher greenness quality of products to consumers. We discuss the technology investment decisions and cooperation strategies between the manufacturer and the retailer, as well as the impacts of government regulations on supply chain members’ decisions. We consider three scenarios: decentralized, government intervention, and cost sharing and government intervention. We derive the optimal technology investment decisions of the manufacturer and retailer. In addition, we identify the conditions for the manufacturer to subsidize the retailer’s disclosure technology costs. The results show that a higher emission reduction subsidy encourages GERT investments and increases supply chain members’ profits. However, when the government sets a higher emission reduction standard, the subsidy neither increases the emission reduction nor benefits the retailer, and hurts the manufacturer’s profit. We also demonstrate that when there is cost sharing and government intervention, emission reduction and supply chain performance are always better than in the other scenarios.

Optimal Technology Investment under Emission Trading Policy

Low-carbon economy is gaining growing attention nowadays as global warming intensifies. As a market-based policy, emission trading policy is widely considered an effective means to achieve the doublewin of economic development and environmental protection. Under such circumstances, carbon trading markets are developing rapidly in many countries and regions, demanding more attention to compliance strategy issues for emission-intensive companies. In this study, we build a dynamic programming model in search of the optimal emission trading and technology investment decisions for a make-to-order company faced with a stochastic demand under emission trading policy. After a comprehensive analysis of the proposed model, we find that an optimal emission permit level, which increases in carbon penalty and decreases in carbon price, exists in each period. As for the abatement technology investment decision, the firm should invest only if the investment cost per unit of abatement effort is less than a certain threshold, which increases in carbon penalty and carbon price. On the basis of a two-period dynamic programming model, we further explore the problem of investment timing. Results show how optimal investment decisions are influenced by the speed of technology progress under different parameters. These findings are important for firms to choose the time of investment depending on specific situations.

Closed-Loop Supply Chain Network Equilibrium Model with Subsidy on Green Supply Chain Technology Investment

The green supply chain (GSC) can effectively reduce the waste of resources and avoid environmental pollution. For a closed-loop supply chain network consisting of multiple manufacturers, multiple retailers, and multiple consumer and recycling markets, we assume that retailers are responsible for the recycling of used products, manufacturers use raw materials to produce new products and recycled products for remanufacturing, and government departments subsidize all manufacturers and retailers for GSC technology investment. Then, the equilibrium conditions of manufacturers, retailers, demand markets, and recycling markets are obtained by using the variational inequality method, complementarity theorem, and Nash equilibrium theory, and the variational inequality model of the closed-loop supply chain network multiphase equilibrium is established. Based on numerical simulation, the optimal technology investment decision of green supply chain under different government subsidy rates, and the influence of market structure and enterprise cost asymmetry on the equilibrium solution of supply chain network are analyzed. The results show that government subsidies can effectively promote enterprises to upgrade their level of GSC technology investment. The intensification of enterprise competition and the asymmetry of enterprise costs will affect the composition of enterprise profits and the allocation of profits between enterprises, and the former will weaken the effect of government subsidies.

The timing of taxes on CO 2 emissions when technological change is endogenous

How do technology spillovers affect the relationship between emissions taxes and technological change? Without spillovers, a regulator applies Pigovian taxes which lead to a first-best optimum (optimal emissions and optimal technology investment). Given spillovers, Pigovian taxes are likely to be second-best optimal if emissions-saving technology and production technology are equally undersupplied; raising taxes above the Pigovian level boosts emissions-saving investment, but only at the expense of production investment. The technologies are equally undersupplied when there is a degree of symmetry between the sectors, and the economy is on a balanced growth path. On a transition path with rising atmospheric stocks and a high level of investment in emissions-saving technology, a regulator may raise carbon taxes above the Pigovian level in order to encourage investment in emissions-saving technology at the expense of production technology. I show this using both analytical and numerical results.

Risk-based technology portfolio optimization for early space mission design

The successful design, development, and operation of space missions requires informed decisions to be made across a vast array of investment, scientific, technological, and operational issues. In the work reported in this paper, we address the problem of determining optimal technology investment portfolios that minimize mission risk and maximize the expected science return of the mission. We model several relationships that explicitly link investment in technologies to mission risk and expected science return. To represent and compute these causal and computational dependencies, we introduce a generalization of influence diagrams that we call inference nets. To illustrate the approach, we present results from its application to a technology portfolio investment trade study done for a specific scenario for the projected 2009 Mars MSL mission. This case study examines the impact of investments in precision landing and long-range roving technologies on the mission capability, and the associated risk, of visiting a set of preselected science sites. We show how an optimal investment strategy can be found that minimizes the mission risk given a fixed total technology investment budget, or alternatively how to determine the minimum budget required to achieve a given acceptable mission risk.

Keeping up with the technology pace: A DNS-curve and a limit cycle in a technology investment decision problem

In order to keep up with its economic environment a firm should respond to new technological developments. In this paper we establish the optimal technology investment decision within a dynamic model, in which the baseline technology level rises over time. The problem is analyzed by designing a two state optimal control model. It turns out that in the state space a Dechert–Nishimura–Skiba (DNS)-curve can be determined that separates different long run outcomes, viz., zero investment, constant positive investment, or a cyclical sequence of zero and positive investment.

Strategic investment in technological innovations

The aim of this paper is to determine the optimal timing of technology investment of a single firm in a duopoly framework. As time passes different technologies are invented which after sometime become available for the firm to adopt. The question here is not only when a firm should invest but also which technology should be adopted. For different scenarios the optimal technology investment decision is determined. Outcomes range from pre-emption equilibria to equilibria with second mover advantages.