Journal of Economics & Management Strategy最新文献

This paper examines whether partial ownership of a trading partner can alleviate hold-up problems and promote relationship-specific investments. Unlike a silent financial interest, which does not give the owner control over the partner and promotes both parties' investments, partial control over the partner could reduce the partner's investment and lead the owner to overinvest, thereby decreasing the joint surplus. The inability of the owner to restrain himself from abusing his control limits the effectiveness of partial ownership. An analysis of the control environment should be part of the empirical analysis of partial ownership and the assessment of its potential benefits by competition authorities.

We reflect on the progress and prospects of artificial intelligence (AI)-powered transformation in healthcare from the perspective of front-line clinical professionals responsible for care delivery. While there is considerable optimism about the potential of AI, critical gaps in understanding remain that represent fruitful opportunities for economics and management scholars. We outline the ways in which the strengths of AI can compensate for key limitations of physicians. We then focus on productive use of AI by physicians, highlighting the need for a deeper understanding of human-AI teaming. We argue that productive teaming requires research on two critical issues: trust in AI and the redesign of clinical workflow to optimally accommodate artificial and human intelligence synergistically.

This paper studies the price-setting behavior of a monopoly facing two capacity constraints: one on the number of its consumers, and the other on the amount of products it can sell. The characterization of the firm's optimal pricing and optimal customer mix as a function of its two capacities reveals a rich structure. In contrast to the results under one-dimensional capacity constraints with constant marginal cost of production, a firm may optimally respond to an exogenous reduction in one of its capacities by decreasing one of its prices. Moreover, neglecting the existence of the second capacity constraint can reverse some policy interventions' effects on consumer welfare. In particular, easing a regulatory restriction on one of the constraints may harm the average consumer.

In contrast to the extensive literature on behavior bias by individuals, studies on behavior bias by firms have been relatively scarce. We explore the possibility of the latter in the context of US airlines, where fuel hedging leads to lump sum gains or losses which may impact airlines' pricing decisions. Our results show that the (sunk) hedging gains or losses affect airlines' ticket prices. In particular, a 10% reduction in airlines' reported fuel costs (due to hedging gains) leads to a 2.2% reduction in ticket prices. Moving onto nonprice decisions, we find that hedging gains lead airlines to use larger aircraft and reduce the airtime of their flights, yet have no impact on the number of routes and flights which the airlines operate. Our results provide empirical evidence that fixed/sunk costs can affect firms' prices and nonprice decisions, establish a link between financial market and product market competition, and have important welfare/policy and managerial implications.

Decision-making authority is often bundled with accountability. Decision makers are usually made accountable for failure. We propose an incomplete-contract approach to investigate four accountability systems: personal accountability, no accountability, collective accountability, and reverse accountability. We consider an organization defined by three assignments: income, authority, and accountability. These assignments are endogenously and jointly determined in equilibrium. Our main findings are: (1) authority and accountability are usually, but not always, bundled in equilibrium; (2) personal accountability and collective accountability are equally efficient, and no accountability and reverse accountability are equally efficient; (3) no accountability can be optimal if the authority is quite capable; (4) control tends to be assigned to managers whose personal benefit from and the marginal cost of control are relatively small; and (5) reverse accountability is generally inferior to personal accountability, but it can be optimal if the authority is quite capable and her marginal cost and personal benefit from control are sufficiently small.

Manufacturers frequently resist heavy discounting of their products by retailers. Since low prices should increase demand and manufacturers could simply refuse to fund deep price promotions, such resistance is puzzling at first sight. We develop a model in which price promotions cause shoppers to evaluate the relative importance of quality and price against a market-wide reference point. With deep discounting, consumers perceive quality differences as less pronounced, eroding brand value and the bargaining position of brand manufacturers. This reduces their profits and may even lead to a delisting of their products. By linking price promotions to increased one-stop shopping and more intense retail competition, our theory also offers an explanation for the rise of store brands.

Researchers have frequently used data on product ranks to estimate nonpublic sales quantities, believing that there is a power-law-induced linear relationship between logged sales ranks and logged sales. Using essentially complete data on book sales, the most commonly used product in this literature, we find that the (double-logged) relationship between sales ranks and quantity sold is not linear, but robustly concave. We demonstrate that this concavity is likely to cause very poor sales predictions in many instances. We provide two concrete examples where applying this linear method to the concave relationship has led to serious errors in sales estimates. First, in the claim that the Internet's greater product variety in books has a large positive impact on social welfare, and second, in a claim about relative sales levels in top 20 and top 50 music “charts.” We also explore the use of nonlinear specifications as an alternative method to predict sales from ranks and find a simple specification that provides much better sales estimates. Finally, we examine the possibility that a particular type of biased sample might allow reasonable linear estimates of industry sales and conclude that it is possible but quite unlikely.

We offer a theory of anticompetitive tying in two-sided markets when below-cost or negative pricing is possible. With the coexistence of two consumer groups (one regarding tying and tied goods as complementary and the other as independent), a tying-good monopolist may face difficulties in extracting rent under separate sales and wish to use tying to directly capture the large advertising revenue created in the complementary segment. We uncover two distinct mechanisms by which tying raises monopoly profits but reduces social welfare. Our theory of tying can be applied to real-world antitrust law enforcement, such as the Google Android case.

In this paper, I study how and why consumers react differently to package downsizing and package price increases that result in the same degree of unit price increases. Utilizing differential responses of South Korean milk manufacturers to the production cost rise in 2018, I first show that consumers strongly prefer downsizing to package price increases, and this tendency does not diminish over time. Then, I develop a theoretical model whose prediction is consistent with the empirical findings, providing a simple but novel explanation of why fully informed consumers would be less sensitive to downsizing than package price increases.

We study sequential mergers under incomplete information where the follower is ignorant about the leader's merger synergy. When the follower's own synergy is sufficiently large, incomplete information induces both firms to merge more. These additional mergers benefit both firms and total welfare but hurt consumers. If the follower's synergy is very small, the leader is unable to take any strategic action, and most results are reversed. The analysis suggests that incomplete information strengthens the strategic complementarity between the two mergers and thereby increases the likelihood of a merger wave.