Welfare Impacts of Behavior-Based Price Discrimination with Asymmetric Firms
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- Asia-Pacific Journal of Business
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- v.11 no.1
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- pp.17-26
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- 2020
Purpose - This paper studies the welfare impacts of behavior-based price discrimination (BBPD) when firms are asymmetric in quality improvement costs. Design/methodology/approach - To this end, we consider a differentiated duopoly model with an inherited market share, where firms first make quality decisions and then compete in prices according to the pricing scheme, namely, uniform pricing or BBPD. Findings - We show that BBPD increases social welfare relative to uniform pricing if the firms' cost gap is large enough. This is because BBPD induces more consumers to buy a high-quality product than under uniform pricing, and because a low-cost firm's profit loss from BBPD decreases as the cost difference increases. Research implications or Originality - Our analysis offers policy implications for markets where BBPD raises antitrust concerns, and quality competition prevails.
Internet commerce has been growing at a rapid pace for the last decade. Many firms try to reach wider consumer markets by adding the Internet channel to the existing traditional channels. Despite the various benefits of the Internet channel, a significant number of firms failed in managing the new type of channel. Previous studies could not cleary explain these conflicting results associated with the Internet channel. One of the major reasons is most of the previous studies conducted analyses under a specific market condition and claimed that as the impact of Internet channel introduction. Therefore, their results are strongly influenced by the specific market settings. However, firms face various market conditions in the real worlddensity and disutility of using the Internet. The purpose of this study is to investigate the impact of various market environments on a firm's optimal channel strategy by employing a flexible game theory model. We capture various market conditions with consumer density and disutility of using the Internet.
There is need to reform the road-based logistic transportation system into the railway-based logistics transportation system in order to decrease the total social cost related with logistics transportation. And new transportation modes such as dual mode trailer (DMT) are under consideration, which are expected to decrease current market share of road. But, most of current studies about estimating economical efficiency are focused on developing the probabilistic choice model and then estimating the market share of each mode. We present an approach to compute the optimal market share of each mode in terms of total social cost. To do so, we suggest an optimization model capturing both user choice to maximize his utility and subsidy policy intended to minimize total social cost, simultaneously. Using this model, we present the optimal modal split of container freight.
Despite the innovation of AI and Big Data, theoretical research bout the effect of AI and Big Data on market competition is still in early stages; therefore, this paper analyzes the effect of AI, Big Data, and data sharing on an entry firm by using game theory. In detail, the firms' business environments are divided into internal and external ones. Then, AI algorithms are divided into algorithms for (1) customer marketing, (2) cost reduction without automation, and (3) cost reduction with automation. Big Data is also divided into external and internal data. this study shows that the sharing of external data does not affect the incumbent firm's algorithms for consumer marketing while lessening the entry firm's entry barrier. Improving the incumbent firm's algorithms for cost reduction (with and without automation) and external data can be an entry barrier for the entry firm. These findings can be helpful (1) to analyze the effect of AI, Big Data, and data sharing on market structure, market competition, and firm behaviors and (2) to design policy for AI and Big Data.
Purpose - In this study, we tried to find that the relationship between the perception of customers on the airline service quality, customer satisfaction, and intention to reuse in Chinese low-cost carriers industry. Design/methodology/approach - We conducted the empirical study for hypotheses testing using the survey data of experienced users in Chinese low-cost carriers service. In this study, reliability and factor analysis were conducted using SPSS 26.0, the path analysis was performed using AMOS 24. Findings - We found that the customer's perception of aviation operation, reservation/ ticketing, online information service provided by Chinese low-cost carriers are positively associated with customer satisfaction. In addition, it was confirmed that customer satisfaction is positively related to the intention to reuse. Research implications or Originality - Based on the results of analysis, it was confirmed that the basic sub-services of the airline are also important in the low-cost carriers services market.
A mass production system was implemented to reduce a manufacturing cost in a way of copying with a strong world market competition. However customer's demands are changing so rapidly and the mass production system is no longer competitive to meet the demands. FMS(Flexible Manufacturing System) has been introduced as a replacement for the mass production system, but it still does not meet system's requirements. A new manufacturing system, called a holonic manufacturing system (HMS), is emerging. This paper is giving a first approach of a HMS for a multirobot cooperative process.
Purpose - Recently, Korean companies have been struggling to perform well in the larger smartphone market in China, which is regarded as a blue ocean area. First, it is very important to accurately understand the Chinese consumers, who have a different consumption culture and value system from the Korean culture and system. This would help to identify priorities for the Chinese market. Further, considering the smartphone industry, where technological change is rapid, Korean companies will need to take prompt measures about market trends in order to establish strong competitiveness. Consequently, this study focused on analyzing the relationship between the variables of consumption value, satisfaction, and loyalty in the Chinese smartphone market. The principal dimensions of consumption value, which smartphones have, was analyzed, and the influence on satisfaction was identified. Moreover, the relationship among the variables of satisfaction, attitudinal loyalty, and behavioral loyalty was empirically analyzed. Research design, data, and methodology - This study examined the relationships between various consumption values (functional value, emotional value, social value, epistemic value, and economic value), along with satisfaction and loyalty. The data were collected through a questionnaire survey that was circulated to 310 customers who were users of smartphones in Chingdao and Yeontae regions in China. The survey was conducted from June 23 to August 4, 2013. A total of 301 responses to the questionnaires were collected and used for the data analysis. Moreover, a path analysis based on Lisrel 8.54 was used for the hypothesis test. Results - The variables of functional value, emotional value, social value, and epistemic value were revealed to have positive effects on satisfaction related to smartphone usage. However, the variables of monetary cost and psychological cost were not found to have negative effects on satisfaction related to smartphone usage. Moreover, satisfaction positively influenced attitudinal loyalty related to smartphone usage, but did not have a significant influence on behavioral loyalty related to smartphone usage. Specifically, satisfaction is essential, but not a sufficient condition for building behavioral loyalty in relation to smartphone usage. In addition, attitudinal loyalty positively influenced behavioral loyalty in relation to smartphone usage. Conclusions - First, this study shows that functional value, emotional value, social value, and epistemic value in relation to smartphone usage are important for marketing in the Chinese smartphone market. Particularly, functional value and emotional value play pre-eminent roles as regards customer loyalty in the use of smartphones. Second, the results of this study reveal that the variables of monetary cost and psychological cost are not important to the Chinese consumers. Specifically, the smartphone price and cognitive effort are not perceived as value barriers. Third, satisfaction did not guarantee behavioral loyalty in relation to smartphone usage, and the strategic approach for improving the repurchase and referral action in relation to smartphones based on solid attitudinal loyalty would be desirable and should be the focus of the marketing activities of Korean smartphone companies.
Even in the best of economic environments, restaurants menu pricing is a serious concern to those in the food service industry. During times of rapid inflation, closer government regulation of compensation practices, and limited gains in worker productivity, the decisions regarding the proper charge for menu items become increasingly important. In addition to many operational and managerial factors, an important ingredient in the food service enterprise's success is its ability to meet the market by providing the value expected. The contribution-margin approach to pricing described above is familiar to cost accountants, who will also recognize that it admits of much elaboration before it can become a tool for day-to-day decisions. But the system probably has the greatest promise for multi-unit companies, where the cost benefit ratio of additional refinements improves in proportion to the number of operations. For example, the analysis required to specify the demand function better becomes less expensive if the findings can be applied to the pricing structure of numerous units. In any of its many adaptations, the essence of the integrated menu pricing system remains its ability to bring together the relevant revenues and costs with the operator's sense of the market and competitive environment to suggest prices that maximize profits.
Traditional studies of new venture performance have focused on the characteristics of entrepreneurs and have shown conflicting results on the relationship between the characteristics and performance of new ventures. Recently, some researchers have broadened their search to include aspects of the industry and the strategy of new ventures. The purposes of this study are to identify wtrategic archetypes of new ventures based on the taxonomic approach and to explain the differences in new venture characteristics and performance among strategic archetypes. To find the strategic archetypes, 114 new venture CEOs from various industries were asked to describe their ventures' competitive strategy through 19 questionnaire items on competitive methods. Using factor analysis and subsequent cluster analysis, four archetypes were identified such as : versatile type, technology-driven type, market-oriented type, and cost reduction type. The results imply that there exist different types of venture strategy even among new technology-based venture firms in Korea, and show the differences in performance among strategic archetypes: market-oriented type and versatile type are better than cost reduction type in terms of growth rate and profitability. Because the venture strategy in identified as a major determinant of the venture performance in this study, the choice of venture strategy suitable for firm's industrial characteristics and internal resource bases becomes a very strategic decision for firm's sustained growth. Further studies are needed to strengthen some methodological limitations of the study.
A company is a core of free market capitalism. It needs to be sustainable to make capitalism better. In this reason, a company has to be ethical to be longer, because unethical company can not be survival. It means that we should understand what is the ethical company and how to be. Because interdisciplinary exchanges give a hint to understand what and how from, so it was studied to find the academic theories which have a relationship with ethics or morality not only in the area of Business management, but also Psychology, Pedagogy, Ethics, Philosophy, and etc.. Making a visible structure by System Dynamics with results through interdisciplinary exchanges to understand the reason why unethical accidences are rising and damages are growing although companies pay "Ethics Pays" more and more to reduce immoral cases is the goal of this study. On the theory of "Social Ethics", 5 ways explain the reason why unethical behavior has not been demolished make a complex structure, which was founded from studying interdisciplinary exchanges such as "Ethics Pays", "Moral Reasoning", "Social Cost", and "Fallacy of Compositions". Finding the controllers and Factors of this model to control to be better, then the market could be more effective with lesser social cost.
shows the channel structures analyzed in this study. Before the Internet channel is introduced, a monopoly manufacturer sells its products through an independent physical store. From this structure, the manufacturer could introduce its own Internet channel (MI). The independent physical store could also introduce its own Internet channel and coordinate it with the existing physical store (RI). An independent Internet retailer such as Amazon could enter this market (II). In this case, two types of independent retailers compete with each other. In this model, consumers are uniformly distributed on the two dimensional space. Consumer heterogeneity is captured by a consumer's geographical location (ci) and his disutility of using the Internet channel ( shows various market conditions captured by the two consumer heterogeneities. (a) illustrates a market with symmetric consumer distributions. The model captures explicitly the asymmetric distributions of consumer disutility in a market as well. In a market like that is represented in (c), the average consumer disutility of using an Internet store is relatively smaller than that of using a physical store. For example, this case represents the market in which 1) the product is suitable for Internet transactions (e.g., books) or 2) the level of E-Commerce readiness is high such as in Denmark or Finland. On the other hand, the average consumer disutility when using an Internet store is relatively greater than that of using a physical store in a market like summarizes the various scenarios of consumer distributions analyzed in this study. The range for disutility of using the Internet (
summarizes the analysis results. As the average travel cost in a market decreases while the average disutility of Internet use remains the same, average retail price, total quantity sold, physical store profit, monopoly manufacturer profit, and thus, total channel profit increase. On the other hand, the quantity sold through the Internet and the profit of the Internet store decrease with a decreasing average travel cost relative to the average disutility of Internet use. We find that a channel that has an advantage over the other kind of channel serves a larger portion of the market. In a market with a high average travel cost, in which the Internet store has a relative advantage over the physical store, for example, the Internet store becomes a mass-retailer serving a larger portion of the market. This result implies that the Internet becomes a more significant distribution channel in those markets characterized by greater geographical dispersion of buyers, or as consumers become more proficient in Internet usage. The results indicate that the degree of price discrimination also varies depending on the distribution of consumer disutility in a market. The manufacturer in a market in which the average travel cost is higher than the average disutility of using the Internet has a stronger incentive for price discrimination than the manufacturer in a market where the average travel cost is relatively lower. We also find that the manufacturer has a stronger incentive to maintain a high price level when the average travel cost in a market is relatively low. Additionally, the retail competition effect due to Internet channel introduction strengthens as average travel cost in a market decreases. This result indicates that a manufacturer's channel power relative to that of the independent physical retailer becomes stronger with a decreasing average travel cost. This implication is counter-intuitive, because it is widely believed that the negative impact of Internet channel introduction on a competing physical retailer is more significant in a market like Russia, where consumers are more geographically dispersed, than in a market like Hong Kong, that has a condensed geographic distribution of consumers.
Estimation of Optimal Modal Split Considering the Subsidy Policy - In the Case of Dual Mode Trailer
(보조금 정책을 고려한 적정 수송 분담률 추정 모형 - Dual Mode Trailer(DMT) 사례를 중심으로)
The Effect of AI and Big Data on an Entry Firm: Game Theoretic Approach
(인공지능과 빅데이터가 시장진입 기업에 미치는 영향관계 분석, 게임이론 적용을 중심으로)
Empirical Study on Customer Satisfaction and Intention to Reuse in Chinese Low Cost Carrier Industry
(중국 저가항공사 서비스 만족도 및 재이용 의도에 관한 연구)
A Holonic Manufacturing Oriented System
(Holonic Manufacturing 지향적인 시스템)
The Effects of Consumption Value on Satisfaction and Loyalty: Focusing on Chinese Smartphone Users
(소비가치가 만족과 충성도에 미치는 영향: 중국 스마트폰 이용고객을 중심으로)
AN INTEGRATED RESTAURANT MENU-PRICING SYSTEM
(레스토랑 종합 메뉴 판매 가격 결정 시스템에 관한 연구)
신생모험기업의 전략유형에 관한 연구
A Exploratory Research for Solutions of Ethical Issues and Sutainability of Enterprises with Social Ethical Approach
(사회윤리학적 접근을 통한 기업의 윤리문제 해결과 지속가능 성장에 관한 탐색적 연구)
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