Introducing Autonomous Vehicles: Adoption Patterns and Impacts on Social Welfare

2021 ◽  
Author(s):  
Opher Baron ◽  
Oded Berman ◽  
Mehdi Nourinejad
Keyword(s):  
Social Welfare ◽  
Autonomous Vehicles ◽  
Positive Impact ◽  
Network Connectivity ◽  
Optimal Level ◽  
Problem Definition ◽  
Travel Times ◽  
Managerial Implications ◽  
Sharing Patterns ◽  
The Impact

Problem definition: Autonomous vehicles (AVs) are predicted to enter the consumer market in less than a decade. There is currently no consensus on whether their presence will have a positive impact on users and society. The skeptics of automation foresee increased congestion, whereas the advocates envision smoother traffic with shorter travel times. We study the automation controversy and advise policymakers on how and when to promote AVs. Academic/practical relevance: The AV technology is advancing rapidly and there is a need to study its impact on social welfare and the likelihood of its adoption by the public. Methodology: We use supply-demand theory to find the equilibrium number of trips for autonomous and regular households. We develop a simulation model of peer-to-peer AV sharing. We compare the socially optimal level of automation with the selfish adoption patterns where households independently choose their vehicle type. Results: We establish that the optimal social welfare is influenced by: (i) the network connectivity, that is, the ability of the infrastructure to serve AVs, (ii) the additional comfort provided by AVs that allows passengers to engage in other productive activities instead of driving, and (iii) the AV sharing patterns that reduce ownership costs, but create empty vehicle trips that increase congestion. Managerial implications: We investigate the impact of AVs in a case study of Toronto and show that partial automation maximizes social welfare. We show that the comfort of AVs may add traffic that compromises social welfare. Moreover, although traffic increases with automation, travel times may decrease because of significant improvements in traffic flow caused by AV connectivity in the network.

Ride-Hailing Platforms: Competition and Autonomous Vehicles

2022 ◽  
Author(s):  
Auyon Siddiq ◽  
Terry A. Taylor
Keyword(s):  
Social Welfare ◽  
Autonomous Vehicles ◽  
Sufficient Conditions ◽  
Structural Effect ◽  
Problem Definition ◽  
Theoretic Model ◽  
Fleet Size ◽  
Managerial Implications ◽  
Public Policy Decisions ◽  
Necessary And Sufficient

Problem definition: Ride-hailing platforms, which are currently struggling with profitability, view autonomous vehicles (AVs) as important to their long-term profitability and prospects. Are competing platforms helped or harmed by platforms’ obtaining access to AVs? Are the humans who participate on the platforms—driver-workers and rider-consumers (hereafter, agents)—collectively helped or harmed by the platforms’ access to AVs? How do the conditions under which access to AVs reduces platform profits, agent welfare, and social welfare depend on the AV ownership structure (i.e., whether platforms or individuals own AVs)? Academic/practical relevance: AVs have the potential to transform the economics of ride-hailing, with welfare consequences for platforms, agents, and society. Methodology: We employ a game-theoretic model that captures platforms’ price, wage, and AV fleet size decisions. Results: We characterize necessary and sufficient conditions under which platforms’ access to AVs reduces platform profit, agent welfare, and social welfare. The structural effect of access to AVs on agent welfare is robust regardless of AV ownership; agent welfare decreases if and only if the AV cost is high. In contrast, the structural effect of access to AVs on platform profit depends on who owns AVs. The necessary and sufficient condition under which access to AVs decreases platform profit is high AV cost under platform-owned AVs and low AV cost under individually owned AVs. Similarly, the structural effect of access to AVs on social welfare depends on who owns AVs. Access to individually owned AVs increases social welfare; in contrast, access to platform-owned AVs decreases social welfare—if and only if the AV cost is high. Managerial implications: Our results provide guidance to platforms, labor and consumer advocates, and governmental entities regarding regulatory and public policy decisions affecting the ease with which platforms obtain access to AVs.

Implications of Price Matching in Supply Chain Negotiation

2021 ◽  
Author(s):  
Weixin Shang ◽  
Gangshu (George) Cai
Keyword(s):  
Supply Chain ◽  
Social Welfare ◽  
Wholesale Price ◽  
Consumer Welfare ◽  
Problem Definition ◽  
Nash Bargaining ◽  
Price Matching ◽  
The Impact ◽  
Multiple Buyers ◽  
Wholesale Pricing

Problem definition: Few papers have explored the impact of price matching negotiation (PM), in which a channel matches its price with the resulting wholesale price bargained by another channel, on firms’ performances, consumer welfare, and social welfare, with and without supply chain coordination. Academic/practical relevance: Negotiation has been widely seen in determining both uniform and discriminatory wholesale prices, which affect outcomes of competitive supply chain practices. Methodology: To characterize the PM mechanism, we use game theory and Nash bargaining theory to compare PM with simultaneous negotiation (SN) through a common-seller two-buyer differentiated Bertrand competition model. Results: Our analysis reveals that PM can benefit the seller but hurt all buyers, which is at odds with some fair wholesale pricing clauses intending to protect buyers. Under coordination with side payments, however, all firms can conditionally benefit more from PM than from SN. Despite firms’ gains, PM leads to less consumer utility and social welfare compared with SN, unless the second buyer in PM is considerably less powerful than the first buyer. Coordination further worsens PM’s negative impact on consumer utility and social welfare. Moreover, the existence of a spot market can increase the wholesale price in PM, hurting buyers, consumers, and society. Furthermore, the qualitative results about PM remain robust under an alternative disagreement point for PM, multiple buyers, and other extensions. Managerial implications: This paper delivers insights on when price matching in supply chain wholesale price negotiation can benefit a seller, buyers, consumers, and society in a variety of scenarios. It advocates how managers can use PM to their own advantages and provides rationale to decision makers for policy regulations regarding wholesale pricing.

The Effects of Patent Extension and Take-Back Regulation on Green Pharmacy

2021 ◽  
Author(s):  
Tianqin Shi ◽  
Nicholas C. Petruzzi ◽  
Dilip Chhajed
Keyword(s):  
Pharmaceutical Industry ◽  
Social Welfare ◽  
Technical Information ◽  
Problem Definition ◽  
Theoretic Model ◽  
Innovative Company ◽  
Take Back ◽  
Starting Point ◽  
European Environmental Agency ◽  
Managerial Implications

Problem definition: The eco-toxicity arising from unused pharmaceuticals has regulators advocating the benign design concept of “green pharmacy,” but high research and development expenses can be prohibitive. We therefore examine the impacts of two regulatory mechanisms, patent extension and take-back regulation, on inducing drug manufacturers to go green. Academic/practical relevance: One incentive suggested by the European Environmental Agency is a patent extension for a company that redesigns its already patented pharmaceutical to be more environmentally friendly. This incentive can encourage both the development of degradable drugs and the disclosure of technical information. Yet, it is unclear how effective the extension would be in inducing green pharmacy and in maximizing social welfare. Methodology: We develop a game-theoretic model in which an innovative company collects monopoly profits for a patented pharmaceutical but faces competition from a generic rival after the patent expires. A social-welfare-maximizing regulator is the Stackelberg leader. The regulator leads by offering a patent extension to the innovative company while also imposing take-back regulation on the pharmaceutical industry. Then the two-profit maximizing companies respond by setting drug prices and choosing whether to invest in green pharmacy. Results: The regulator’s optimal patent extension offer can induce green pharmacy but only if the offer exceeds a threshold length that depends on the degree of product differentiation present in the pharmaceutical industry. The regulator’s correspondingly optimal take-back regulation generally prescribes a required collection rate that decreases as its optimal patent extension offer increases, and vice versa. Managerial implications: By isolating green pharmacy as a potential target to address pharmaceutical eco-toxicity at its source, the regulatory policy that we consider, which combines the incentive inherent in earning a patent extension on the one hand with the penalty inherent in complying with take-back regulation on the other hand, serves as a useful starting point for policymakers to optimally balance economic welfare considerations with environmental stewardship considerations.

scholarly journals Nonbinding Goals in Teams: A Real Effort Coordination Experiment

2020 ◽  
Vol 22 (5) ◽  
pp. 1026-1044
Author(s):  
James Fan ◽  
Joaquín Gómez-Miñambres
Keyword(s):  
Energy Use ◽  
Weak Link ◽  
Human Subjects ◽  
Individual Performance ◽  
Problem Definition ◽  
Reference Points ◽  
Team Production ◽  
Team Members ◽  
Managerial Implications ◽  
The Impact

Problem definition: We investigate the impact of nonbinding (wage-irrelevant) goals, set by a manager, on a team of workers with “weak-link” production technology. Can nonbinding goals improve team production when team members face production complementarity? Academic/practical relevance: Nonbinding goals are easy to implement and ubiquitous in practice. These goals have been shown to improve individual performance, but it remains to be seen if such goals are effective in team production when there is production complementarity among workers. Methodology: We first develop a theoretical model where goals act as reference points for workers’ intrinsic motivation to complete the task. We then test our hypotheses in a controlled, human-subjects experiment. In our experiment, participants act as managers or workers, and we examine the impact of nonbinding goals on team outcomes. Results: Consistent with our model, we find evidence that team production does increase when managers are able to set goals. This effect is strongest when goals are challenging but attainable for weak-link workers. However, we also find evidence that many managers assign goals that are too challenging for weak-link workers, resulting in suboptimal team production, lower profits, and higher wasted performance (performance above the weak-link level). Managerial implications: Our analysis indicates that goals are effective motivators in teams, but some managers may have difficulty overcoming personal biases when setting goals. The task of setting team goals is more complex than setting individual goals, and many managers can benefit from training on how to set good goals for the team. Moreover, our finding that suboptimal goals also increase wasted performance suggests that improving goal-setting strategies is especially important in production settings where overperformance is costly for the firm (scrap, energy use, inventory costs, lower prices as a result of oversupply, etc.).

scholarly journals Sense of Ownership Realization in Social Practices: Prospects for Research and Practical Application

2021 ◽  
Keyword(s):  
Social Relations ◽  
Critical Analysis ◽  
Positive Impact ◽  
Daily Practice ◽  
Optimal Level ◽  
Social Practices ◽  
Research Development ◽  
Practical Application ◽  
Sense Of Ownership ◽  
The Impact

The article considers the directions of further research development on the implementation of a sense of ownership in various spheres of life and social practices of an individual. It is shown that in addition to the positive impact, the feeling of ownership has its negative side. This raises the question of formation optimal level and manifestation of ownership, what negative and positive consequences an excessive manifestation of ownership can have, what a violation or immaturity of ownership can lead to. It is determined that most research on the psychological nature of property focuses on its individual manifestation. However, it requires a detailed study, including the empirical, how the collective sense of ownership differs from individual and collective and whether it contributes to the effectiveness of collective action. The issue of the impact of new forms of consumption on the living sense of ownership and the attentiveness of intangible property, especially in the conditions of virtual reality, is raised separately. Prospects for further scientific research and possible areas of practical application of the developed author's concept of an ownership sense realization in social practices are outlined. Based on a critical analysis of existing empirical research and reflective consideration, the following areas of further research are proposed: manifestation of material things ownership, territory, money, social relations, own body, virtual environment, civic sphere, as well as opportunities to use the data in both individual and group psychotherapeutic work, counseling and coaching. The necessity of introducing a scientifically substantiated concept into the daily practice of psychologists-practitioners is substantiated.

scholarly journals “VIETNAMESE CONSUMES VIETNAMESE PRODUCTS”: THE ROLE OF ETHNOCENTRISM, PERCEIVED QUALITY AND PERCEIVED PRICE ON WILLINGNESS TO BUY

2011 ◽  
Vol 14 (3) ◽  
pp. 56-67
Author(s):  
Hau Nguyen Le ◽  
Quynh Truc Tran ◽  
Anh Duc Le
Keyword(s):  
Structural Model ◽  
Positive Impact ◽  
Perceived Quality ◽  
Willingness To Buy ◽  
Perceived Price ◽  
Managerial Implications ◽  
Using Data ◽  
The Impact ◽  
Domestic Products

This study investigates the impact of ethnocentrism, perceived quality and perceived price on the extent of consumer willingness to buy domestic garment products. A structural model has been estimated using data collected from 422 consumers in HCM city. The results indicate that perceived price and ethnocentrism have direct positive impacts and perceived quality have indirect positive impact on the willingness to buy domestic products. Perceived quality and ethnocentrism also have an impact on the perceived price. Based on these findings, theoretical as well as managerial implications have been discussed.

AI and Procurement

2021 ◽  
Author(s):  
Ruomeng Cui ◽  
Meng Li ◽  
Shichen Zhang
Keyword(s):  
Price Discrimination ◽  
Recommendation System ◽  
Wholesale Price ◽  
Problem Definition ◽  
Practical Relevance ◽  
Trading Company ◽  
Smart Control ◽  
Managerial Implications ◽  
The Impact ◽  
Price Quotes

Problem definition: In this research, we study how buyers’ use of artificial intelligence (AI) affects suppliers’ price quoting strategies. Specifically, we study the impact of automation—that is, the buyer uses a chatbot to automatically inquire about prices instead of asking in person—and the impact of smartness—that is, the buyer signals the use of a smart AI algorithm in selecting the supplier. Academic/practical relevance: In a world advancing toward AI, we explore how AI creates and delivers value in procurement. AI has two unique abilities: automation and smartness, which are associated with physical machines or software that enable us to operate more efficiently and effectively. Methodology: We collaborate with a trading company to run a field experiment on an online platform in which we compare suppliers’ wholesale price quotes across female, male, and chatbot buyer types under AI and no recommendation conditions. Results: We find that, when not equipped with a smart control, there is price discrimination against chatbot buyers who receive a higher wholesale price quote than human buyers. In fact, without smartness, automation alone receives the highest quoted wholesale price. However, signaling the use of a smart recommendation system can effectively reduce suppliers’ price quote for chatbot buyers. We also show that AI delivers the most value when buyers adopt automation and smartness simultaneously in procurement. Managerial implications: Our results imply that automation is not very valuable when implemented without smartness, which in turn suggests that building smartness is necessary before considering high levels of autonomy. Our study unlocks the optimal steps that buyers could adopt to develop AI in procurement processes.

Prepositioning and Local Purchasing for Emergency Operations Under Budget, Demand, and Supply Uncertainty

2021 ◽  
Author(s):  
Mahyar Eftekhar ◽  
Jing-Sheng Jeannette Song ◽  
Scott Webster
Keyword(s):  
Optimal Solution ◽  
Rapid Onset ◽  
Problem Definition ◽  
Supply Uncertainty ◽  
Approximate Methods ◽  
Humanitarian Organizations ◽  
Solution Methods ◽  
Local Supply ◽  
Managerial Implications ◽  
The Impact

Problem definition: Considering a mix of prepositioning and local purchasing, common to cover humanitarian demands in the aftermath of a rapid-onset disaster, we propose policies to determine preposition stock. These formulations are developed in the presence of demand, budget, and local supply uncertainties and for single-items delivery. Academic/practical relevance: The immediate period aftermath of a disaster is the most crucial period during which humanitarian organizations must supply relief items to beneficiaries. Yet, because of many unknowns such as time, place, and magnitude of a disaster, supply management is a significant challenge, and these decisions are made intuitively. The features and complexities we examine have not been studied in the literature. Methodology: We derive properties of the optimal solution, identify exact solution methods, and determine approximate methods that are easy to implement. Results: We (i) characterize the interplay of supply, demand, and budget uncertainties, as well as the impact of product characteristics on optimal prepo stock levels; (ii) show in what conditions the prepo stock is a simple newsvendor solution; and (iii) discuss the value of emergency funds. Managerial implications: We show that budget level is a key determinant of the optimal policy. When it is above a threshold, inventory increases in disaster frequency and severity, but the reverse is true otherwise. When budget is limited, the rate of savings from improved forecasts is amplified (attenuated) for critical (noncritical) items, reflecting opposing directional effects of mismatch cost and cost of insufficient funding. Our model can also be used to estimate the value of initiatives to mitigate constraints on local spend (e.g., a line of credit underwritten by large donors that is available during the immediate relief period).

The effect of cyber-risk insurance to social welfare

2017 ◽  
Vol 24 (2) ◽  
pp. 329-346 ◽  
Author(s):  
Damla Kuru ◽  
Sema Bayraktar
Keyword(s):  
Social Welfare ◽  
Market Failure ◽  
Positive Impact ◽  
Data Availability ◽  
Malicious Attacks ◽  
Security Investment ◽  
Content Type ◽  
Cyber Insurance ◽  
Types Of Information ◽  
The Impact

Purpose Previous studies generally focused on the definition of cybercrime and its effect on the market. Following Kesan’s study, this paper aims to analyse the relationship between cyber insurance and social welfare and compare it among three countries, namely, USA, UK and Turkey. The paper also discusses the main obstacles that the cyber insurer has to deal with and its effect on social welfare. This paper answers two questions related to cyber insurance at an aggregate level. First, “what kind of contribution does cyber insurance make to social welfare?” Second,“What kind of problems do insurers and insured have to face?” Although the findings are similar to Kesan’s study, this study gives an opportunity to make a country-based study and interpret the results with a different perspective. Design/methodology/approach The calculation of utility is also important for interpreting social welfare in the market. Consumer behaviour under uncertainty constructs the background for this paper because the risks of malicious attacks are contingent and independent, which means that consumers have to make their decisions under uncertainty. Von-Neumann-Morgenstern utility function is used for interpreting consumer’s behaviour. Findings Basically, there are two important conclusions that can derive for cyber insurance. First, cyber insurance can be defined as a higher security investment when coupled with increased levels of safety and a robust IT infrastructure. Second, cyber insurance, as a high-security investment, would have a positive impact on social welfare by making the internet safer for all users. The results show that the problems that lead to market failure can be virtually eliminated with an accurate risk assessment that leads to appropriate premium levels for insured. These results are consistent with those of study by Kesan et al. (2006). Research limitations/implications Data availability for different industries have limited the ability to compare the impact of cyber-crime to different sectors. Originality/value Technological devices have become part of our daily life. Although they have brought us increasing access to all types of information, including opportunities for business, they have also increased the risk of malicious attacks and the risk of e-crime. By replicating the economic model used by Kesan et al. (2006), social welfare losses and insurance premiums are calculated for three countries: USA, UK and Turkey. Questions pertaining to contribution of cyber insurance to social welfare and problems faced by insurers and insured are addressed.

scholarly journals Does Risk Disclosure Matter for Trade Credit?

2021 ◽  
Vol 14 (3) ◽  
pp. 133
Author(s):  
Issal Haj-Salem ◽  
Khaled Hussainey
Keyword(s):  
Information Asymmetry ◽  
Trade Credit ◽  
Positive Impact ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Short Term ◽  
Managerial Implications ◽  
Information Opacity ◽  
The Impact

In this paper, we examine the impact of risk disclosure practices on trade credit. We hypothesize that risk information could reduce information opacity that arises between companies and their suppliers. We collected annual reports for Tunisian listed companies for the period 2008–2013. This gives us 146 firm-year observations. We find that risk disclosure has a positive impact on the level of trade credit. Our paper offers a new empirical evidence on the role of risk disclosure in reducing information asymmetry and increase companies’ access to short-term external funds. Our study provides managerial implications for firms, suppliers, and regulatory authorities.

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