A De-biased Direct Question Approach to Measuring Consumers' Willingness to Pay

Knowledge of consumers' willingness to pay (WTP) is a prerequisite to profitable price-setting. To gauge consumers' WTP, practitioners often rely on a direct single question approach in which consumers are asked to explicitly state their WTP for a product. Despite its popularity among practitioners, this approach has been found to suffer from hypothetical bias. In this paper, we propose a rigorous method that improves the accuracy of the direct single question approach. Specifically, we systematically assess the hypothetical biases associated with the direct single question approach and explore ways to de-bias it. Our results show that by using the de-biasing procedures we propose, we can generate a de-biased direct single question approach that is accu-rate enough to be useful for managerial decision-making. We validate this approach with two studies in this paper.Comment: Market Research, Pricing, Demand Estimation, Direct Estimation, Single Question Approach, Choice Experiments, Willingness to Pay, Hypothetical Bia

URBAN ENVIRONMENTAL SERVICES IN DEVELOPING COUNTRIES

As cities in the developing world grow, their poor residents are being deprived of services, especially water, sewer, and solid waste collection, that can only be purchased expensively in private markets. But the inadequate provision of urban environmental services is not inevitable. A lack of will in this respect is partly due to an ambivalent attitude toward city growth and a widespread feeling that rural-urban migration is excessive. Provision of optimal urban environmental services is also expensive. While the budget problems are exacerbated by foolish pricing policies and cost inefficiencies, it may not be feasible for developing countries to provide all urban residents with optimal service levels. There are many ways to provide basic services to poor residents.Resource /Energy Economics and Policy,

Bending vibration of an automotive turbocharger under the influence of rotor imbalance

As one of the most common faults, rotor imbalance in a turbocharger will give rise to the bending vibration, which may cause damage to and even destroy the bearings and impellers. Therefore, it is necessary to detect rotor imbalance as early as possible. The present paper develops a mathematical model for investigating the rotor dynamic characteristics of a commercial automotive turbocharger supported on floating ring bearings. In order to reveal the behaviours of oil film instabilities the model takes into account nonlinear hydrodynamic oil film forces instead of linearization. A two-dimensional elastic collision model is introduced to deal with the rub-impact process between such solid parts as journal, floating ring and the bearing. In addition, the change of clearances in floating ring bearing due to temperature increases are also estimated by ignoring the variation of lubricating oil viscosity. Following model development, a numerical simulation is implemented to study the bending vibration of the turbocharger and floating ring bearing under the influence of rotor imbalance. This study paves a foundation for the monitoring of turbochargers

Channel Coordination in the Presence of a Dominant Retailer

The retail trade today is increasingly dominated by large, centrally managed “power retailers.” In this paper, we develop a channel model in the presence of a dominant retailer to examine how a manufacturer can best coordinate such a channel. We show that such a channel can be coordinated to the benefit of the manufacturer through either quantity discounts or a menu of two-part tariffs. Both pricing mechanisms allow the manufacturer to charge different effective prices and extract different surpluses from the two different types of retailers, even though they both have the appearance of being “fair.” However, quantity discounts and two-part tariffs are not equally efficient from the manufacturer’s perspective as a channel coordination mechanism. Therefore, the manufacturer must judiciously select its channel coordination mechanism. Our analysis also sheds light on the role of “street money” in channel coordination. We show that such a practice can arise from a manufacturer’s effort to mete out minimum incentives to engage the dominant retailer in channel coordination. From this perspective, we derive testable implications with regard to the practice of street money

Detuning effects in the one-photon mazer

The quantum theory of the mazer in the non-resonant case (a detuning between the cavity mode and the atomic transition frequencies is present) is written. The generalization from the resonant case is far from being direct. Interesting effects of the mazer physics are pointed out. In particular, it is shown that the cavity may slow down or speed up the atoms according to the sign of the detuning and that the induced emission process may be completely blocked by use of a positive detuning. It is also shown that the detuning adds a potential step effect not present at resonance and that the use of positive detunings defines a well-controlled cooling mechanism. In the special case of a mesa cavity mode function, generalized expressions for the reflection and transmission coefficients have been obtained. The general properties of the induced emission probability are finally discussed in the hot, intermediate and cold atom regimes. Comparison with the resonant case is given.Comment: 9 pages, 8 figure

Conspicuous Consumption on the Long Tail: How can Luxury Brands Benefit from Counterfeits?

We study how luxury brands can use product line expansion as a strategy when facing a threat from the counterfeit market. Consumers who are status-conscious consider the benefits and costs of buying luxury items in order to strengthen the beliefs of others about their status. Our findings suggest that product line expansion strategy serves these high-end consumers and their motives to strengthen their status image. In a market with counterfeiters, consumers have an incentive to buy additional products in order to reduce the uncertainty of their status signals. Increasing consumption makes it harder for others to imitate status when authentic brands signal quality and status with higher precision compared to counterfeits. Since each luxury item purchased contributes to one\u27s status in a marginally declining fashion, it is rational for a luxury brand to expand its product line such that it maintains its core product and introduces peripheral products with lower status signalling benefits and prices. We further show that an increasing counterfeit market share can increase status-conscious consumers\u27 willingness to pay for luxury goods. As a result, presence of counterfeiters can increase the profit of a luxury brand

Social Media, Content Moderation, and Technology

This paper develops a theoretical model to study the economic incentives for a social media platform to moderate user-generated content. We show that a self-interested platform can use content moderation as an effective marketing tool to expand its installed user base, to increase the utility of its users, and to achieve its positioning as a moderate or extreme content platform. The optimal content moderation strategy differs for platforms with different revenue models, advertising or subscription. We also show that a platform's content moderation strategy depends on its technical sophistication. Because of imperfect technology, a platform may optimally throw away the moderate content more than the extreme content. Therefore, one cannot judge how extreme a platform is by just looking at its content moderation strategy. Furthermore, we show that a platform under advertising does not necessarily benefit from a better technology for content moderation, but one under subscription does. This means that platforms under different revenue models can have different incentives to improve their content moderation technology. Finally, we draw managerial and policy implications from our insights

Agency Selling or Reselling? Channel Structures in Electronic Retailing

In recent years, online retailers (also called e-tailers) have started allowing manufacturers direct access to their customers while charging a fee for providing this access, a format commonly referred to as agency selling. In this paper, we use a stylized theoretical model to answer a key question that e-tailers are facing: When should they use an agency selling format instead of using the more conventional reselling format? We find that agency selling is more efficient than reselling and leads to lower retail prices; however, the e-tailers end up giving control over retail prices to the manufacturer. Therefore, the reaction by the manufacturer, who makes electronic channel pricing decisions based on their impact on demand in the traditional channel (brick-and-mortar retailing), is an important factor for e-tailers to consider. We find that when sales in the electronic channel lead to a negative effect on demand in the traditional channel, e-tailers prefer agency selling, whereas when sales in the electronic channel lead to substantial stimulation of demand in the traditional channel, e-tailers prefer reselling. This preference is mediated by competition between e-tailers—as competition between them increases, e-tailers prefer to use agency selling. We also find that when e-tailers benefit from positive externalities from the sales of the focal product (such as additional profits from sales of associated products), retail prices may be lower under reselling than under agency selling, and the e-tailers prefer reselling under some conditions for which they would prefer agency selling without the positive externalities

Automatically Constructed Neural Network Potentials for Molecular Dynamics Simulation of Zinc Proteins

The development of accurate and efficient potential energy functions for the molecular dynamics simulation of metalloproteins has long been a great challenge for the theoretical chemistry community. An artificial neural network provides the possibility to develop potential energy functions with both the efficiency of the classical force fields and the accuracy of the quantum chemical methods. In this work, neural network potentials were automatically constructed by using the ESOINN-DP method for typical zinc proteins. For the four most common zinc coordination modes in proteins, the potential energy, atomic forces, and atomic charges predicted by neural network models show great agreement with quantum mechanics calculations and the neural network potential can maintain the coordination geometry correctly. In addition, MD simulation and energy optimization with the neural network potential can be readily used for structural refinement. The neural network potential is not limited by the function form and complex parameterization process, and important quantum effects such as polarization and charge transfer can be accurately considered. The algorithm proposed in this work can also be directly applied to proteins containing other metal ions