Flexible Mixed Logit with Posterior Analysis: Exploring Willingness-to-Pay for Grid Resilience

This paper presents and employs an alternative approach to explore consumer preferences and willingness-to-pay (WTP) for resilience of the electricity grid. The methodological and practical relevance of this approach is demonstrated using the example of the UKs incentive regulation scheme for electricity distribution network operators (DNOs). The estimation strategy exibly accounts for preference heterogeneity in the population, allows for scale heterogeneity (i.e. heterogeneity in the randomness of choice) and exploits individual posterior distributions to improve the estimates. Since the results suggest significant parameter heterogeneity within and across DNOs, it is argued that Ofgem's current method to evaluate consumer preferences and WTP is likely to result in an inefficient level of resilience services. The welfare implications in case of public and private goods and services are discussed. The suggested approach is straightforward to implement, could improve policy evaluations and foster more nuanced and efficient incentive regulation

Seeing Grocery in a New Light: Investigating Oda Norway's firm specific advantages in the Finnish grocerymarket.

With Oda having experienced a rapid growth ever since its debut in 2013, the increased online interest following the pandemic further accelerated the company’s upwards trajectory. With its 70 percent market share of the online grocery segment in Norway and a unicorn title in 2021, the company attracted powerful investors. This led to the possibility of expanding, where the choice fell on the international scene rather than solely focusing on domestic growth. We investigate Oda’s firm specific advantages (FSAs) and the extent to which these are transferable to the Finnish grocery market. To answer this question, we have mainly utilized secondary sources of information, including financial statements, reports, press releases, news articles, and podcasts. The information has been analyzed through literature frameworks such as, the business model canvas, Porter’s competitive advantage, competition analysis, international business, and behavioral economics. We applied the VRIO framework from the resource-based view, Porter’s ten cost drivers from the activity-based theory, and the complementarity framework by Porter and Siggelkow to identify Oda’s FSAs. The company’s FSAs in its home country are found to be the business model in its entirety. This is substantiated by the many complementary activities and valuable resources found when analyzing the company’s business model. The most important are the interplay between, the logistics competency and self-made logistics system specialized for grocery, the pickers in production and the logistics system, and the integrated delivery service coupled with the order processing system. In addition, the valuable resource found in the company’s centralized warehouse is crucial for Oda’s success. The Lien et al. framework was used to explain the FSAs in the context of the Norwegian grocery market and the associated competition. A comparison between the Norwegian and Finnish grocery market was made to identify differences in the two markets. These were included with the literature of liability of foreignness (LOF) to explain the potential challenges one might face as a foreign company. Oda’s most evident sources of LOF are challenges related to securing supplier deals, the Finnish consumers slightly differing preference, and potential market responses from the established competition. These findings require awareness from Oda, however, the business model in itself is found to be replicable in the Finnish market while still contributing to a FSA. This is especially true as no business model in the Finnish market was of similar nature to Oda’s model.nhhma

Three Essays on Urban Consumer Service Firms: Evidence from Yelp

This dissertation explores questions related to consumer services using Yelp data from the Phoenix area. Chapter 1 explores competition. Competition is a key feature of the market process assumed to improve market outcomes. But how strong is the relationship between competition and positive consumer experiences, and how does the relationship vary across space? This chapter explores these questions by exploiting Yelp data from thousands of restaurants in the Phoenix area. After controlling for restaurant characteristics, census tract level demographics, census tract fixed effects, and sub-industry fixed effects, the results are consistent with spatial competition positively affecting consumer experiences. Chapter 2 considers where these consumer service firms are located. The chapter analyzes the spatial concentration of a variety of consumer services firms in the Phoenix, AZ area using geo-referenced Yelp data from over 29,000 establishments. Results from a K-density approach indicate substantial localization and service differentiation among localized firms. Firm concentration varies across service cost and quality; higher quality/cost establishments tend to cluster. Chapter 3 explores the influence of emotional cues on consumer behavior. Using nearly 1 million Yelp reviews from the Phoenix area, I empirically test for the presence of loss aversion and reference-dependent preferences in reviewer behavior. Consistent with loss aversion, unexpected losses lead to worse reviews while there is no effect for unexpected wins. The results also reflect reference-dependent preferences since wins and losses in games predicted to be close do not impact reviewer behavior

DIGITAL WINE: HOW PLATFORMS AND ALGORITHMS WILL RESHAPE THE WINE INDUSTRY

La tesi si propone di analizzare come la digitalizzazione e gli approcci basati sui dati, in particolare quelli che sfruttano l'intelligenza artificiale, stiano impattando il settore vitivinicolo e facendo emergere modelli nuovi di business. Quest'ultimo aspetto sarà approfondito tramite due casi studio di piattaforme digitali che, attraverso approcci diversi, stanno contribuendo a generare un ecosistema digitale virtuoso, con potenziali benefici per tutta la catena del valore a livello di settore.The thesis aims to analyze how digitalization and data-driven approaches, in particular those that leverage artificial intelligence, are impacting the wine industry and generating new business models. The latter aspect will be explored through two case studies of digital platforms which, through different approaches, are helping to generate a virtuous digital ecosystem, with potential benefits for the entire value chain at the industry level

Essays in Applied Microeconomics

This thesis consists of 4 chapters in the field of applied microeconomics. Chapter 1 develops a model of international roaming. International alliances emerge endogenously and serve as a commitment device to soften competition on the retail market. Chapter 2 provides an explanation for why political leaders may want to adopt ideological positions. Because voters expect the perceived ideology of office holders to determine their future political actions, politicians are tempted to act according to their ideology. Chapter 3 analyzes a procurement problem in which two specialized agents compete for selling a good. The optimal procurement scheme trades off increasing the buyer’s chances to obtain a suitable product against reducing the sellers’ rents. Chapter 4 compares certification to a minimum quality standard (MQS) policy when some consumers cannot discern the quality of the offered goods. Depending on the proportion of informed customers, either instrument may be preferred.roaming; political polarization; procurement; certification

Management of intrinsic quality characteristics for high-value specialty coffees of heterogeneous hillside landscapes

Tropical hillsides are ecologically and socially diverse with a multitude of small- to medium-sized farms that offer a potential treasure chest of high-value market crops. Specialty coffees, for example, earn a substantial price premium and are therefore a promising opportunity for farmers. Coffee quality is determined by the natural environment and farm management practices. To sell high-priced coffee, farmers must produce beans desired by consumers who are willing to pay more for specific quality profiles. A targeting of the production practices to suit the continuously-changing market demands is necessary; the focus must be on controlling the processes that determine the quality characteristics. The present research aimed to develop a framework to manage the intrinsic coffee quality of heterogeneous hillside landscapes. In a two-tiered approach, firstly spatial prediction models were developed and tested to identify the comparative advantage of environmental niches and secondly systematic farm management practices were developed and tested to turn the comparative advantage of farmers into a competitive advantage. Commercial sensorial data of the two Colombian departments of Cauca and Antioquia, of the Veracruz department in Mexico and of the five coffee growing regions in Honduras were used to develop and test the framework. The results suggest that the framework is highly viable; the information generated is highly novel, is high-medium actionable and is medium deliverable to stakeholders. The specific conclusions derived are: (1) The production environment of coffee (natural environment, agronomic management and post-harvest processes) is variable over space. (2) Beverage quality of coffee is dependent on the production environment. The combination of decisive quality factors varies from location to location, and so does the contribution of each factor. (3) Production factors can be identified and their impact quantified. Subsequently the factors can be systematically controlled and managed to improve product quality. (4) Site-specific systematic and cyclic quality control processes are required to decrease produce variability and deliver a product sought by the market. (5) The approach is twofold, firstly the identification of suitable environmental niches followed by definition of site-specific management. (6) Farm management interventions are not always statistically significant but often relevant for farmers. (7) Qualitative quality-control methods using commercial data are viable indicators for quality measurements so long as consistent, skilled evaluators (cuppers) are selected in preliminary testing.Management der intrinsischen Qualitätscharakteristiken von hochwertigen Spezialitätenkaffees aus heterogenen Hanglagen Der Kaffeeanbau in tropischen Hanglagen variiert ökologisch sehr stark und ist sozial besonders geprägt durch eine Vielzahl von kleinen und mittleren landwirtschaftlichen Betrieben, welche ein hohes Potential für die Produktion von hochwertigen Agrarprodukten haben. Spezialitätenkaffees werden mit einem Mehrwert belohnt und sind deshalb eine vielversprechende Option für diese Bauern. Kaffeequalität ist wesentlich durch die natürlichen Umweltbedingungen und die agronomischen Praktiken bestimmt. Um hochwertige Kaffees vermarkten zu können, müssen die Bauern einen Rohkaffee produzieren, welcher vom Markt nachgefragt wird und für welchen der Konsument bereit ist, einen entsprechenden Aufpreis zuzahlen. Deshalb ist eine kontrollierte gezielte Produktion notwendig um mit den sich konstant ändernden Marktpräferenzen Schritt halten zu können. Die vorliegende Arbeit hat zum Ziel ein Rahmenwerk vorzulegen, welches es erlaubt, die Kaffeequalität aus heterogenen Hanglagen einschätzen, kontrollieren und beeinflussen zu können. Im ersten Teil der Dissertation werden räumliche Vorhersagemodelle entwickelt und getestet, um den komparativen Vorteil von Umweltnischen zu bestimmen. Im zweiten Teil erfolgt die Analyse der systematischen Anbaupraktiken, um den komparativen Standortvorteil der Bauern auch kompetitiv nutzen zu können. Kommerzielle sensorische Daten von Kaffees aus den kolumbianischen Departamentos (entspricht Bundesländern in Deutschland) Cauca und Antioquia, aus dem Departamento Veracruz in Mexiko, und aus den fünf Kaffeebauzonen in Honduras wurden verwendet, um das Rahmenwerk zu entwickeln und zu testen. Die Ergebnisse zeigen, dass das Rahmenwerk höchst brauchbar und die mit dem Rahmenwerk generierte Information höchst neuartig, hoch bis mittelmässig umsetzbar, und mittelmässig zugänglich ist. Insgesamt lassen sich folgende Schlussfolgerungen ziehen: (1) Das Produktionsumfeld (natürliche Umwelt, agronomisches Umfeld und Nachernteverfahren) ist standortsvariable. (2) Die Tassenqualität hängt vom Produktionsumfeld ab. Die Kombination der qualitätsbeeinflussenden Faktoren variiert von Standort zu Standort und ebenfalls der Beitrag der einzelnen Faktoren. (3) Limitierende Produktionsfaktoren konnten identifiziert und deren Einfluss quantifiziert werden. Dies erlaubt eine systematische Kontrolle und Beeinflussung einzelner Faktoren, um die Produktqualität verbessern zu können. (4) Ortsspezifische, systematische und zyklische Qualitätskontrollprozesse sind notwendig, um die Variabilität der Produktqualität zu verringern und ein vom Markt nachgefragtes Produkt herzustellen zu können. (5) Die Herangehensweise beinhaltet zwei Teilschritte. Zuerst werden geeignete Nischen identifiziert und darauf basierend das ortspezifische Qualitätsmanagement definiert. (6) Managementinterventionen sind nicht immer statistisch signifikant, aber trotzdem oft relevant für den Bauern. (7) Qualitative Methoden zur Qualitätskontrolle, basierend auf kommerziellen Daten, sind brauchbare Indikatoren für die Erfassung der Tassenqualität, so lange gut ausgebildete Verkoster in Voruntersuchungen ausgewählt wurden

Essays in platform economics

In this thesis we present three papers which investigate informative content generated by consumers, aiming to improve the usefulness for matching high quality products at lower prices. Following a general perspective, we explore platform product listing, searchable through a decision making mechanism. In a more specialized perspective, we take into account a dropping price modality service, differentiating the consumer benefit in the case of high or low quality product matching. Chapter 1 Product quality on platform markets. Abstract Many studies have questioned the meaning of \u201cproduct quality\u201d, hanging between a characteristic interpretation of a product for improving consumer satisfaction, and scientific approach to measure its benefits. Starting from the historical quality setting as mirror image of the price, we investigate the adoption of new signals, developed over the years to adjust the original relationship. Recently, bootstrapping by emperor of e-commerce platforms, the rating system has emerged as a reference contribute for product quality informativeness. We study this tendency, to show its failure in the presence of low price market and new brands. For this purpose, we collect User Generated Contents from a well-known online retailing platform. We capture and distill meaningful features in order to adjust the rating assigned by reviewers, and propose a novel quality formula able to increase the accuracy of the information provided to the consumer. We suggest that our formula better captures product quality, and, when adopted by a platform for sorting the products, it increases the products variety and, consequently the satisfaction of the consumer. Our proposal suggests a way to facilitate the consumer search (as we will show in the second chapter). Moreover, it can be used as a measure of market efficiency in the case of voluntary opacity of the platform in exposing product quality signals.Chapter 2 Optimizing Product Quality in Online Search Abstract Exploiting an original definition of product quality, based on the information we can get from the User Generated Content, and driven by a statistical learning algorithm, we propose a new ordering mechanism for product search on platforms. This product quality formula is imported in a decision making mechanism which adopts an optimal Stopping Rule, in order to set the optimal time to terminate the search process and choose a good to purchase. We show how the consumer can benefit from the implementation of such a mechanism, demonstrating an improvement in terms of consumer utility at different levels of price, with respect to other sorting traditionally adopted by platforms. We propose a utility function fitted to a Gumbel distribution, and we demonstrate a stochastic dominance of our model. Experimental evidences on the camera market category put in relevance the efficiency of our quality index for ranking the effective quality compared to the more traditional rating system. This is particularly true for the low-price accessory market segment of products, in which we show higher utility dominance and slightly higher elasticity of demand.Chapter 3 Price Matching and Platform Pricing Abstract In this study we investigate the effects of Price Matching Guarantees (PMG) commercial policies on U.S. online consumer electronics daily prices. By applying a Diff-in-Diff identification strategy we find evidence in favor of price reductions occurring after the PMG policy is repealed. We further investigate if such effect is heterogeneous according to products characteristics, by exploiting User Generated Contents (products popularity and quality) and online search visibility measures (Google Search Rank). Estimates suggest that for high quality (visibility) products PMG policies harms competition by keeping prices high, while for low quality (visibility) products, prices decrease during the policy validity period

Essays on dynamic demand, pricing and investment

My dissertation develops and applies empirical structural models to study consumers’ dynamic adoption of durable goods, and firms’ dynamic research and development (R&D) investment and pricing strategies. In Chapter 2, I study consumer purchase dynamics for a new technology good, the digital single-lens-reflex (DSLR) camera, where consumer learning and switching costs across brands are present. Using a unique dataset that tracks individual DSLR camera ownership history, I find that low-end DSLR cameras are gateway products that most consumers buy initially. When some consumers choose to repurchase, they are more likely to buy high-end DSLR cameras from the same brand as the initial purchases. Combining individual camera ownership data with aggregate sales data, I develop and estimate a dynamic demand model that incorporates consumer learning and switching costs. The estimated demand model implies a dynamic complementary relationship between high- and low-end products that are produced by the same firm. In Chapter 3, I further empirically investigate the influence of consumer purchase dynamics on forward-looking firms’ pricing strategies. Supply-side simulations imply that firms have incentives to invest in their customer bases using low-end products and to harvest the resolved uncertainty of valuation and switching costs using high-end products. In Chapter 4, I explore the nature of uncertainty in innovation production through firms’ R&D investment. Utilizing a rich dataset that tracks Spanish manufacture firms’ R&D activities and innovation outcomes for up to 17 years, I build and estimate a dynamic model of firms’ R&D investment incorporates the uncertainties in innovation