Uniform Price Research Articles

Network creation with homophilic agents

AbstractNetwork Creation Games are an important framework for understanding the formation of real-world networks. These games usually assume a set of indistinguishable agents strategically buying edges at a uniform price, which leads to the formation of a network among them. However, in real life, agents are heterogeneous and their relationships often display a bias towards similar agents, say of the same ethnic group. This homophilic behavior on the agent level can then lead to the emergent global phenomenon of social segregation. We study Network Creation Games with multiple types of homophilic agents and non-uniform edge cost, introducing two models focusing on the perception of same-type and different-type neighbors, respectively. Despite their different initial conditions, both our theoretical and experimental analysis show that both the composition and segregation strength of the resulting stable networks are very similar, indicating a robust structure of social networks under homophily.

Channel structures of third-party platforms

The growing prominence of third-party (3P) platforms in the online retail sector has made the selection of an appropriate channel structure strategy a critical concern for manufacturers, 3P platforms, and retailers operating within this environment. We construct a Stackelberg game model with the manufacturer as the leader, evaluating four channel structures: (A) reselling and retailer agency selling, (B) agency selling and retailer agency selling, (C) reselling and agency selling, and (D) reselling, agency selling, and retailer agency selling. The supply chain can adopt two pricing strategies: uniform pricing (UP) and differential pricing (DP). Research indicates that expanding the number of channels may not always enhance profitability for suppliers and supply chain participants. Under strategy UP, the 3P platform opts for structure B, whereas the retailer favors structure C. Incorporating agency selling is advantageous for the manufacturer; however, structure A represents the least beneficial option for the supply chain. Under strategy DP, a substantial portion of the pareto optimal region is present. Intense competition and reduced agency fees lead both the supply chain as a whole and individual member to prefer structure A. The addition of a reselling or retailer agency channel boosts the manufacturer's profits, and benefits the 3P platform, while structure D emerges as the least favorable option for the retailer. Furthermore, under strategy DP, structure C is rendered obsolete, signifying the retailer's essential role in the supply chain to the advantage of all involved parties. Our study advances the scholarly understanding of sales models and platform economies by offering valuable insights into the decision-making processes of manufacturers, third-party (3P) platforms, and retailers regarding channel structure choices in a 3P platform environment.

Multiple pricing for personal assistance services

Third-party payers often reimburse health care providers based on prospectively set prices. Although a key motivation of prospective payment is to contain costs, this paper shows that this aspect crucially depends on the design of the pricing scheme due to the well-known incentives of patient selection (or “dumping”). This paper provides a general theoretical framework where heterogeneous users are served by either private for-profit or public providers, each paid an hourly compensation by a third-party payer. The private, but not the public providers may select patients. It is demonstrated that this realistic feature of the model implies that total costs depends on the number of prices. The features of the model is illustrated using the Swedish system of personal assistance services as a motivating example. Numerical results show that marginal adjustments to the current uniform pricing scheme would lead to substantial savings.

The Capitalist and Colonial Logics of Rowland Hill’s Postal Reforms: Terra Nullius , Uniform Pricing, and “Conveyance at the Lowest Rate”

Le pamphlet Post Office Reform publié par Rowland Hill en 1837 est considéré comme ayant influencé la loi britannique sur la poste de 1839, qui a introduit une tarification uniforme et peu élevée ainsi que l’affranchissement du courrier par l’expéditeur. Ces réformes ont à leur tour ensuite induit le Traité de Berne de 1874. Post Office Reform a été rédigé alors qu’Hill était secrétaire de la Commission pour la colonisation de l’Australie du Sud. Ce contexte nous permet de mieux comprendre les logiques à la fois coloniale et capitaliste qui sous-tendent les réformes postales de Hill, influencées en particulier par le plan de colonisation d’Edward Gibbon Wakefield.

Equilibrium vertical structure with a common supplier

AbstractWe consider a vertically related market, in which each downstream firm produces a differentiated product by assembling a key input produced by a common supplier and another input produced by a dedicated upstream firm. On the one hand, vertical integration has the advantage of inducing the common supplier to set a lower input price, but the disadvantage of reducing downstream firms' competitiveness in the downstream market. On the other hand, vertical separation has the advantage of increasing downstream firms' competitiveness in the downstream market but the disadvantage of inducing the common supplier to set a higher input price. Contrary to results of previous studies, we find that the existence of a common supplier can lead to vertical integration under Cournot competition, which emerges as a unique equilibrium when a common supplier adopts input discrimination. Although vertical integration is better for the individual firms, it reduces the total welfare. Even when the common supplier uses uniform input pricing, vertical integration also emerges in equilibrium.

Pricing strategy and its impact on the effort of community leader and platform: Uniform or differentiated pricing?

This paper is motivated by the rapid development of community group buying (CGB), where the CGB platform dramatically relies on the community leader to provide last-mile services and fulfill consumers’ orders. Considering two types of community leaders, the friend role and seller role, this work adopts a game-theoretical model and investigates how the pricing strategy, uniform pricing strategy (N) or differentiated pricing strategy (Y), affects players’ performance and decisions on effort level. This study shows that the commission rate is an essential factor in stimulating the role transformation of community leaders. A significantly large commission rate results in the friend role community leader with lower trust value changing into the seller role. Generally, the community leader works harder under the uniform pricing scenario except in situations with a significant commission rate and moderate sensitivity coefficient of trust value. However, the effort level of the platform is jointly influenced by the pricing strategy, commission rate, and the role of a community leader. Moreover, regardless of the commission rate, when the community leader is a friend role and the trust value is high, both the platform and community leader can gain higher profits under the uniform pricing scenario than the differentiated pricing case. It indicates that a win–win situation can be achieved.

A Smart Approach to Electric Vehicle Optimization via IoT-Enabled Recommender Systems

Electric vehicles (EVs) are becoming of significant interest owing to their environmental benefits; however, energy efficiency concerns remain unsolved and require more investigation. A major issue is a lack of EV charging infrastructure, which can lead to operational difficulties. Effective infrastructure development, including well-placed charging stations (CS), is critical to enhancing connectivity. To overcome this, consumers want real-time data on charging station availability, neighboring station locations, and access times. This work leverages the Distance Vector Multicast Routing Protocol (DVMRP) to enhance the information collection process for charging stations through the Internet of Things (IoT). The evolving IoT paradigm enables the use of sensors and data transfer to give real-time information. Strategic sensor placement helps forecast server access to neighboring stations, optimize vehicle scheduling, and estimate wait times. A recommender system is designed to identify stations with more rapidly charging rates, along with uniform pricing. In addition, the routing protocol has a privacy protection strategy to prevent unauthorized access and safeguard EV data during exchanges between charging stations and user locations. The system is simulated with MATLAB 2020a, and the data are controlled and secured in the cloud. The predicted algorithm’s performance is evaluated using several kinds of standards, including power costs, vehicle counts, charging costs, energy consumption, and optimization values.

Interactions between supplier encroachment format and pricing scheme with horizontal shareholding

This paper examines the interactions between supplier encroachment formats (centralized encroachment or decentralized encroachment) and pricing schemes (specific pricing or uniform pricing) in a two-tier supply chain consisting of one supplier and two incumbent retailers, wherein there exists horizontal shareholding between downstream retailers. The analytical results indicate that, under specific pricing scheme, both the incumbent retailers and the supplier prefer decentralized encroachment if the magnitude of shareholding level and the encroachment cost are high. Under uniform pricing scheme, both the incumbent retailers prefer decentralized encroachment while the supplier prefers centralized encroachment. Under centralized encroachment format, both the acquiring retailer and the supplier have consistent preference over pricing scheme (i.e., specific pricing scheme) while the acquired retailer prefers uniform pricing scheme. Under decentralized encroachment format, both the incumbent retailers prefer uniform pricing scheme if the magnitude of shareholding level is low and the encroachment cost is high, or the magnitude of shareholding level is high; both the supplier and the encroaching retailer prefer specific pricing scheme if the encroachment cost is high.

Industrialization, environmental externality, and climate mitigation strategies

This study proposes a 12-region global modeling framework that integrates industrialization into climate–economy interactions and applies it to explore national strategic interactions and long-term policy outcomes. In this regard, three policy regimes are considered: a non-cooperative Nash equilibrium and two cooperative regimes that maximize the weighted sum of regional welfare. Negishi weights, ensuring uniform carbon price, and equal weights are applied in cooperative setting. Based on the results, global unmitigated emissions will peak around 2040. Given the future industrialization process, developing countries will make greater mitigation efforts under all regimes, whereas the strategies of developed countries will only be affected under the uniform carbon price regime. In the two cooperative regimes, a clear separation of mitigation efforts is observed between developed and developing countries. Moreover, when accounting for industrialization, the global averaged carbon price should grow faster in the first half-century, followed by a period of slower growth. Sensitivity analysis implies that with the support from developed countries, accelerated industrialization in the developing world can help alleviate its environmental strain.

Third-Degree Price Discrimination in Two-Sided Markets

We investigate the welfare effects of third-degree price discrimination by a two-sided platform that enables interaction between buyers and sellers. Sellers are heterogeneous with respect to their per-interaction benefit, and, under price discrimination, the platform can condition its fee on sellers’ type. In a model with linear demand on each side, we show that price discrimination (i) increases participation on both sides, (ii) enhances total welfare, and (iii) may result in a strict Pareto improvement, with both seller types being better off than under uniform pricing. These results, which are in stark contrast to the traditional analysis of price discrimination, are driven by the existence of cross-group network effects. By improving the ability to monetize seller participation, price discrimination induces the platform to attract more buyers, which then increases seller participation. The Pareto improvement result means that even those sellers who pay a higher price under discrimination can be better off, because of the increased buyer participation. This paper was accepted by Joshua Gans, business strategy. Funding: A. de Cornière acknowledges funding from ANR [Grant ANR-17-EURE-0010] (Investissements d’Avenir program). Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.02788 .

Spatio-temporal task pricing for shared electric micro-mobility battery-swapping platform with reinforcement learning

Spatial crowdsourcing has emerged in shared electric micro-mobility platforms, compensating occasional drivers (ODs) per task of swapping micro-mobility batteries. As ODs autonomously select tasks only when satisfied with predetermined compensation and travel distance, a traditional uniform pricing strategy results in possible low task completion. To resolve the imbalance between ODs and tasks, this study introduces a spatio-temporal pricing strategy where task prices differ by region and time interval. Considering the daily variations in task distribution and OD availability, the goal is to minimise the platform costs equal to the sum of total OD wages and penalties for uncompleted tasks. The reinforcement learning approach with proximal policy optimisation (PPO) is implemented to generate real-time continuous task prices. A domain-specific masking technique is incorporated to improve the learning process by disregarding the data from inactive grids in loss calculations. Computational results show that the PPO agent strategically raises prices in regions with insufficient ODs according to the OD density level. Further comparison with the mixed integer programming model with perfect information on ODs' willingness-to-accept parameters demonstrates the superior capability of our algorithm in navigating the uncertainties of OD task acceptance. A sensitivity analysis provides insights into the decision of system parameters.

Evolution of Tax Exemption Policy and Pricing Strategy Selection in a Competitive Market

The evolution of tax exemption policies and consumer preferences for low-carbon products affect firms’ optimal pricing strategy selection in a competitive duopoly market. In our study, we build a two-period pricing model to examine the pricing strategy choices between low-carbon and traditional firms. Low-carbon firms offer consumers greater value, improving their overall experience and satisfaction. Given the evolution of government policies from tax exemption to taxation for low-carbon products, we divide the changes in carbon tax into two periods. Since each firm can choose either the uniform pricing strategy (setting the same price in both periods) or the tiered pricing strategy (setting different prices for two periods), four scenarios may occur. Conventional wisdom suggests that a firm’s pricing increases should result in a reduction in consumer demand. Interestingly, our results show that as traditional firm raises prices, consumer demand for traditional products could increase simultaneously in the second period. In such a case, the low-carbon firm selects the uniform pricing strategy and the traditional firm chooses the tiered pricing strategy. Moreover, as tax exemption policies evolve in duopoly markets, the cancellation of the tax exemption policy may intensify competition between traditional and low-carbon firms under certain conditions. Furthermore, given one firm’s pricing strategy, our results show that the other firm could adopt either a uniform pricing strategy or a tiered pricing strategy, which depends on the low-carbon advantage and tax rate.

Differentiated pricing for the retail electricity provider optimizing demand response to renewable energy fluctuations

As renewable energy expands, its fluctuations challenge grid security. Demand response (DR) is a crucial solution for ensuring grid stability. This paper designs a two-stage optimization model for the retail electricity provider (REP), aiming to develop differentiated prices to incentivize multiple types of users in DR. In the first stage, the REP utilizes energy storage to adjust electricity purchases. In the second stage, a bi-layer optimization model is constructed. The REP participates in incentive-based DR and sets differentiated prices for lower-level users. Based on these prices, multiple types of users modify their electricity consumption behavior, aiming to maximize the combined satisfaction with the comfort and economy of electricity consumption. Finally, the Karush-Kuhn-Tucker (KKT) method is used to derive the equilibrium solution between user response quantity and price. The results indicate that (1) Combining energy storage and user-side DR boosts responsiveness by 28.5% compared to storage alone and 23.2% compared to user-side DR alone. (2) Energy storage allows the REP to create more compelling prices for residential users. (3) Differentiated pricing boosts industrial users participating in DR, resulting in over 50% higher response rate than uniform pricing. This study provides policy implications for grid managers to develop effective DR programs.

Personalized Pricing and Competition

We study personalized pricing in a general oligopoly model. The impact of personalized pricing relative to uniform pricing hinges on the degree of market coverage. If market conditions are such that coverage is high (e.g., the production cost is low or the number of firms is high), personalized pricing harms firms and benefits consumers, whereas the opposite is true if coverage is low. When only some firms have data to personalize prices, consumers can be worse off compared to when either all or no firms personalize prices. (JEL D21, D43, D82)

Optimal day-ahead offering strategy for large producers based on market price response learning

In day-ahead electricity markets based on uniform marginal pricing, small variations in the offering and bidding curves may substantially modify the resulting market outcomes. In this work, we deal with the problem of finding the optimal offering curve for a risk-averse profit-maximizing generating company (GENCO) in a data-driven context. In particular, a large GENCO’s market share may imply that its offering strategy can alter the marginal price formation, which can be used to increase profit. We tackle this problem from a novel perspective. First, we propose an optimization-based methodology to summarize each GENCO’s step-wise supply curves into a subset of representative price-energy blocks. Then, the relationship between the resulting market price and the energy block offering prices is modeled through a probabilistic forecasting tool: a Distributional Neural Network, which also allows us to generate stochastic scenarios for the sensibility of the market towards the GENCO strategy via a set of linear constraints. Finally, this predictive model is embedded in the stochastic optimization model employing a constraint learning approach. Results show how allowing the GENCO to deviate from its true marginal costs renders significant changes in its profits and the marginal price of the market. Additionally, these results have also been tested in an out-of-sample validation setting, showing how this optimal offering strategy can effective in a real-world market context.

CRISIS MITIGATION MECHANISM AND TRAINING NEED OF SUGARCANE GROWERS- AN EMPIRICAL STUDY

A study was conducted to find out the Crisis Mitigation Mechanisms and Training needs of Sugarcane growers in Southern Karnataka during 2022-23. Mandya and Mysore district of Karnataka were selected purposively for the study. Mandya and Maddur blocks in Mandya district and Nanjanagud and Narasipura blocks in Mysore district were selected randomly. Eight villages, two from each block and 120 sugarcane growers, 15 from each village, with minimum five years of experience in sugarcane cultivation were selected as respondents randomly. Blocks, villages and respondents are selected through multistage simple random sampling. Data were collected with structured interview schedule through physical interview method. Statistical tools like frequency, percentage, SD, CV, RBQ, equidistant method was used for data analysis. Food grains, fuel storage followed by fodder storage and relocating to safer places are usually adopted as mitigation measures. They are less aware about various crisis mitigation mechanism to be taken at individual level like contingency crop planning, crop insurance etc. 50 per cent of the sugarcane growers belongs to medium crisis mitigation mechanism adoption category. It was found that they were in need of trainings on IPM, INM, organic farming, entrepreneurship and community disaster management. Training about individual approaches like contingency crop plannings, crop insurance and community approaches of disaster for crisis management to be provided. 43.33 per cent of the sugarcane growers were in high need of training for crisis management. Price crisis was the major crisis faced by farmers followed by labour and finance crisis. Provision of strict law from government to stop delayed payment by factories and maintaining uniform price for sugarcane farmers to be introduced.

The welfare effects of input price discrimination revisited

This paper revisits the welfare effects of input price discrimination in the canonical model in which an upstream monopolist, under linear pricing, sells an intermediate good to downstream Cournot competitors with different marginal costs. By leveling the downstream players, input price discrimination may have a positive output effect, with the magnitude depending on the convexity of final market demand and its rate of change. When demand is linear, concave, or convex with limited and nonincreasing convexity, welfare is reduced compared with uniform pricing. Instead, when there is sufficient and nondecreasing convexity—often observed in constant elasticity demand—price discrimination increases total welfare.

Price customization and targeting in matching markets

AbstractWe introduce a model of (platform‐mediated) many‐to‐many matching in which agents' preferences are both vertically and horizontally differentiated. We first show how the model can be used to derive the profit‐maximizing matching plans under customized pricing. We then investigate the implications for targeting and welfare of uniform pricing (be it explicitly mandated or induced by privacy regulation), preventing the platform from conditioning prices on agents' profiles. The model can be applied to study ad exchanges, online retailing, and media markets.

On the benefit of developing customer profile analysis to implement personalized pricing in a supply chain

PurposeThe advanced technology enables retailers to develop customer profile analysis (CPA) to implement personalized pricing. However, considering the efficiency of developing CPA, the benefit to different retailers of implementing more precise personalized pricing remains unclear. Thus, this essay aimed to investigate the impact of efficiency on participants’ strategies and profits in the supply chain.Design/methodology/approachA two-stage game model was introduced in the presence of a manufacturer who sets his wholesale price and a retailer that decides her CPA strategy. The equilibrium results were generated by backward induction.FindingsMost retailers are willing to develop the highest CPA to implement perfect personalized pricing, but those inefficient retailers with high production costs would like to determine a middle CPA to implement bounded personalized pricing. The retailers’ profits may decrease with the efficiency of developing CPA when the efficiency is middle. In this case, as the efficiency improves, the manufacturer increases the wholesale price, resulting in lower demand and thus lower profits. Moreover, define a Pareto Improvement (PI) strategy as one that benefits both manufacturers and retailers. Therefore, uniform pricing is a PI when the unit cost is high and the efficiency is low; personalized pricing is a PI when the unit cost is low and the efficiency is low or high; otherwise, there is no PI.Originality/valueThis study is the first that investigates how the retailer develops CPA to implement personalized pricing on a comprehensive spectrum, which can provide practical insights for retailers with different efficiencies.

Competition for territories under the switching cost

ABSTRACT This study considers an effective policy to mitigate market powers held by retail liquefied petroleum gas distributors in Japan. A bilateral spatial competition model is constructed to analyse the effect of switching costs of consumers on retail competition in designated areas where stores provide free delivery service at uniform prices. Model analysis shows that, at equilibrium, stores have exclusive delivery areas which are their natural territories given endogenously. If stores commit to their territories, promoting competition with the adjacent market would be effective. Whereas, if stores do not commit, policies to lower the switching cost are effective.