Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania最新文献
The Terrorism Risk Insurance Act (TRIA), passed at the end of 2002, established a public-private partnership between the US federal government, private insurers, and all commercial enterprises operating on US soil. Renewed and modified by the US Congress and the president in January 2015 until December 2020, the TRIA program requires insurers to offer terrorism insurance to their commercial policyholders while providing insurers with free up-front financial protection up to $100 billion against terrorist attacks in the United States. With the federal government providing a financial safety net, the private insurance sector can offer coverage against an uncertain risk that would otherwise be largely considered uninsurable, thus making terrorism insurance widely available and affordable. Overall premiums have been at about 2 to 6 percent of property premiums over the past four years, with the most significant increase recently for financial institutions (from 4 percent in 2012 to 9 percent in 2015). A significant portion of insurance policies, 23 percent according to a recent study by the US Treasury, which are typically those covering smaller firms, include terrorism coverage at no disclosed additional cost. TRIA is a successful case of public-private disaster risk financing that has received bipartisan political support. Yet it remains untested for large losses and it is unclear how the market and policymakers will react should another large-scale insured loss occur. TRIA also raises concerns about the indemnification of individual victims of a terrorist attack (in addition to workers’ compensation).
{"title":"A Successful (Yet Somewhat Untested) Case of Disaster Financing: Terrorism Insurance Under TRIA, 2002–2020","authors":"E. Michel-Kerjan, H. Kunreuther","doi":"10.2139/SSRN.2951178","DOIUrl":"https://doi.org/10.2139/SSRN.2951178","url":null,"abstract":"The Terrorism Risk Insurance Act (TRIA), passed at the end of 2002, established a public-private partnership between the US federal government, private insurers, and all commercial enterprises operating on US soil. Renewed and modified by the US Congress and the president in January 2015 until December 2020, the TRIA program requires insurers to offer terrorism insurance to their commercial policyholders while providing insurers with free up-front financial protection up to $100 billion against terrorist attacks in the United States. With the federal government providing a financial safety net, the private insurance sector can offer coverage against an uncertain risk that would otherwise be largely considered uninsurable, thus making terrorism insurance widely available and affordable. Overall premiums have been at about 2 to 6 percent of property premiums over the past four years, with the most significant increase recently for financial institutions (from 4 percent in 2012 to 9 percent in 2015). A significant portion of insurance policies, 23 percent according to a recent study by the US Treasury, which are typically those covering smaller firms, include terrorism coverage at no disclosed additional cost. TRIA is a successful case of public-private disaster risk financing that has received bipartisan political support. Yet it remains untested for large losses and it is unclear how the market and policymakers will react should another large-scale insured loss occur. TRIA also raises concerns about the indemnification of individual victims of a terrorist attack (in addition to workers’ compensation).","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81835171","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We use unique data on careers of investment managers to study the relation between labor markets and productivity differences across sectors in finance. We document significant labor mobility between mutual funds and hedge funds during the 1990s and 2000s. Descriptive evidence suggests potential inefficiencies in the allocation of skill and capital: switching from mutual funds to hedge funds results in large gains in return-based productivity and value-added. Hedge funds absorb mutual fund managers from the left and the right tails of the distribution of abnormal returns, lower Sharpe ratios, and higher volatility. To explain these patterns, we estimate a simple model of supply and demand for labor, with heterogeneous sector-specific skills. The model is identified using shocks to investor demand. Selection of low-skilled mutual managers into hedge funds was driven by a decrease in the mutual fund demand for such managers, an increase in hedge fund demand across the skill distribution, and idiosyncratic expected gains. Selection-adjusted average treatment effects show a much smaller hedge fund premium in return-based productivity and a we cannot reject a zero premium in value added.
{"title":"Labor Mobility and Productivity: Evidence from Finance","authors":"Roni Kisin, B. Hamilton","doi":"10.2139/ssrn.2885446","DOIUrl":"https://doi.org/10.2139/ssrn.2885446","url":null,"abstract":"We use unique data on careers of investment managers to study the relation between labor markets and productivity differences across sectors in finance. We document significant labor mobility between mutual funds and hedge funds during the 1990s and 2000s. Descriptive evidence suggests potential inefficiencies in the allocation of skill and capital: switching from mutual funds to hedge funds results in large gains in return-based productivity and value-added. Hedge funds absorb mutual fund managers from the left and the right tails of the distribution of abnormal returns, lower Sharpe ratios, and higher volatility. To explain these patterns, we estimate a simple model of supply and demand for labor, with heterogeneous sector-specific skills. The model is identified using shocks to investor demand. Selection of low-skilled mutual managers into hedge funds was driven by a decrease in the mutual fund demand for such managers, an increase in hedge fund demand across the skill distribution, and idiosyncratic expected gains. Selection-adjusted average treatment effects show a much smaller hedge fund premium in return-based productivity and a we cannot reject a zero premium in value added.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"203 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2017-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73961582","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Given CEOs’ substantial equity portfolios, much recent literature on CEO incentives regards cash-based bonus plans as largely irrelevant, begging the question of why nearly all CEO compensation plans include such bonuses. We develop a new measure of bonus plan incentives and show that performance sensitivities are much greater than prior estimates. We also test hypotheses regarding the role of bonuses in providing executives with individualized and team incentives. We find little evidence supporting the individualized incentives hypotheses but find consistent evidence that bonus plans appear to be used to encourage mutual monitoring and to facilitate coordination across the top management team as a whole.
{"title":"The Role of Executive Cash Bonuses in Providing Individual and Team Incentives","authors":"W. Guay, John D. Kepler, David Tsui","doi":"10.2139/ssrn.2849934","DOIUrl":"https://doi.org/10.2139/ssrn.2849934","url":null,"abstract":"Abstract Given CEOs’ substantial equity portfolios, much recent literature on CEO incentives regards cash-based bonus plans as largely irrelevant, begging the question of why nearly all CEO compensation plans include such bonuses. We develop a new measure of bonus plan incentives and show that performance sensitivities are much greater than prior estimates. We also test hypotheses regarding the role of bonuses in providing executives with individualized and team incentives. We find little evidence supporting the individualized incentives hypotheses but find consistent evidence that bonus plans appear to be used to encourage mutual monitoring and to facilitate coordination across the top management team as a whole.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91165277","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
An increasing number of start-ups create online and offline shared goal communities for individuals with similar goals to work towards them in the company of others. Such platforms allow individuals to connect and share effort information under the premise that it is more likely for consumers to reach their goals if they can gauge their activity in line with others’ activities. We study the problem of designing such social communities. We find that co-action communities can motivate individuals to exert higher effort than they would have on their own, if they are appropriately located in a social network with sufficient social influence. Moreover, such communities can help consumers at a greater extent if they are of larger scale and if consumers in the community maintain sufficient levels of heterogeneity in how much they care about their goal progress individually. Our study also offers a method to determine a locally optimal network to design such communities and develops a model to study the conditions under which consumers can be motivated to exert effort towards a goal.
{"title":"Optimal Network Design for Inducing Effort","authors":"Pinar Yildirim, Y. Wei, C. Bulte, Joy Lu","doi":"10.2139/ssrn.2791781","DOIUrl":"https://doi.org/10.2139/ssrn.2791781","url":null,"abstract":"An increasing number of start-ups create online and offline shared goal communities for individuals with similar goals to work towards them in the company of others. Such platforms allow individuals to connect and share effort information under the premise that it is more likely for consumers to reach their goals if they can gauge their activity in line with others’ activities. We study the problem of designing such social communities. We find that co-action communities can motivate individuals to exert higher effort than they would have on their own, if they are appropriately located in a social network with sufficient social influence. Moreover, such communities can help consumers at a greater extent if they are of larger scale and if consumers in the community maintain sufficient levels of heterogeneity in how much they care about their goal progress individually. Our study also offers a method to determine a locally optimal network to design such communities and develops a model to study the conditions under which consumers can be motivated to exert effort towards a goal.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"99 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85777856","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Samuel Bazzi, Arya B. Gaduh, Alexander D. Rothenberg, Maisy Wong
We use a natural experiment in Indonesia to provide causal evidence on the role of location-specific human capital and skill transferability in shaping the spatial distribution of productivity. From 1979-1988, the Transmigration Program relocated two million migrants from rural Java and Bali to new rural settlements in the Outer Islands. Villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later. We find some evidence of migrants' adaptation to agroclimatic change. Overall, our results suggest that regional productivity differences may overstate the potential gains from migration.
{"title":"Skill Transferability, Migration, and Development: Evidence from Population Resettlement in Indonesia","authors":"Samuel Bazzi, Arya B. Gaduh, Alexander D. Rothenberg, Maisy Wong","doi":"10.1257/AER.20141781","DOIUrl":"https://doi.org/10.1257/AER.20141781","url":null,"abstract":"We use a natural experiment in Indonesia to provide causal evidence on the role of location-specific human capital and skill transferability in shaping the spatial distribution of productivity. From 1979-1988, the Transmigration Program relocated two million migrants from rural Java and Bali to new rural settlements in the Outer Islands. Villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later. We find some evidence of migrants' adaptation to agroclimatic change. Overall, our results suggest that regional productivity differences may overstate the potential gains from migration.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85006557","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate whether women are targets of more severe punishment than men following ethical violations at work. Using an experimental design, Study 1 finds evidence that ethical behavior is more strongly prescribed for women than for men, even when they occupy an identical professional role. Study 2 manipulates the gender of a manager in a hypothetical scenario and finds that women are punished more severely than men for ethical violations at work. It also tests the scope of our theory by asking whether women are punished more for errors in general, or only for intentional ethical violations. Using field data, Study 3 examines how severely attorneys are punished for violating the American Bar Association’s ethical rules. Female attorneys are punished more severely than male attorneys, after accounting for a variety of factors. Greater representation of women among decision-makers diminishes the gender disparity in punishment. Our research documents a new prescriptive stereotype faced by women and helps to explain the persistence of gender disparities in organizations. It highlights punishment severity as a novel mechanism by which institutions may derail women’s careers more than men’s.
{"title":"Does Gender Raise the Ethical Bar? Exploring the Punishment of Ethical Violations at Work","authors":"J. Kennedy, M. McDonnell, Nicole M. Stephens","doi":"10.2139/ssrn.2770012","DOIUrl":"https://doi.org/10.2139/ssrn.2770012","url":null,"abstract":"We investigate whether women are targets of more severe punishment than men following ethical violations at work. Using an experimental design, Study 1 finds evidence that ethical behavior is more strongly prescribed for women than for men, even when they occupy an identical professional role. Study 2 manipulates the gender of a manager in a hypothetical scenario and finds that women are punished more severely than men for ethical violations at work. It also tests the scope of our theory by asking whether women are punished more for errors in general, or only for intentional ethical violations. Using field data, Study 3 examines how severely attorneys are punished for violating the American Bar Association’s ethical rules. Female attorneys are punished more severely than male attorneys, after accounting for a variety of factors. Greater representation of women among decision-makers diminishes the gender disparity in punishment. Our research documents a new prescriptive stereotype faced by women and helps to explain the persistence of gender disparities in organizations. It highlights punishment severity as a novel mechanism by which institutions may derail women’s careers more than men’s.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"70 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87361025","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While accurate point estimation of customer lifetime value (CLV) has been the target of a large body of academic research, few have focused on the variance of CLV (V(CLV)), which represents the degree of uncertainty associated with a customer's expected CLV. This is ironic because academics have long known that V(CLV) is one of the most important characteristics that defines and differentiates customers from one another, affecting firms on many fundamental levels. No closed-form, forward-looking statistical procedures have been derived to estimate individual-level V(CLV). For the first time, the authors derive, predict, and validate V(CLV) using a powerful combination of stochastic models for the flow of transactions over time and the company's profit on each transaction. They provide these estimates for 561,100 customers of an omnichannel retailer tracked over a 2.25-year period, making this one of the largest-scale CLV analyses to date. They highlight the importance of V(CLV), analyze its relationship to observable summary statistics such as recency, frequency, and monetary value, and uncover many substantive variance-related insights regarding customer segmentation, scoring, targeting, and more.
{"title":"V(CLV): Examining Variance in Models of Customer Lifetime Value","authors":"D. McCarthy, P. Fader, Bruce G. S. Hardie","doi":"10.2139/ssrn.2739475","DOIUrl":"https://doi.org/10.2139/ssrn.2739475","url":null,"abstract":"While accurate point estimation of customer lifetime value (CLV) has been the target of a large body of academic research, few have focused on the variance of CLV (V(CLV)), which represents the degree of uncertainty associated with a customer's expected CLV. This is ironic because academics have long known that V(CLV) is one of the most important characteristics that defines and differentiates customers from one another, affecting firms on many fundamental levels. No closed-form, forward-looking statistical procedures have been derived to estimate individual-level V(CLV). For the first time, the authors derive, predict, and validate V(CLV) using a powerful combination of stochastic models for the flow of transactions over time and the company's profit on each transaction. They provide these estimates for 561,100 customers of an omnichannel retailer tracked over a 2.25-year period, making this one of the largest-scale CLV analyses to date. They highlight the importance of V(CLV), analyze its relationship to observable summary statistics such as recency, frequency, and monetary value, and uncover many substantive variance-related insights regarding customer segmentation, scoring, targeting, and more.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78632069","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The study examines how the lack of comparable public peers (“informational uniqueness”) is related to a firm’s disclosure policy and information environment. Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. Overall, I find a strong negative relationship between informational uniqueness and the quality of corporate information environment only among firms without regular bundled guidance. This suggests that, while informational uniqueness can generate significant information deficiency, firms with strong tacit disclosure commitment are able to largely compensate for the lack of information spillover from peers.
{"title":"Informational Uniqueness, Corporate Disclosure, and Information Environment","authors":"Jacky Chau","doi":"10.2139/ssrn.2753147","DOIUrl":"https://doi.org/10.2139/ssrn.2753147","url":null,"abstract":"The study examines how the lack of comparable public peers (“informational uniqueness”) is related to a firm’s disclosure policy and information environment. Having less information spillover from other public firms may present an information deficiency if it is not compensated by other components of the information environment. Consistent with firms attempting to mitigate the information deficiency through strengthening their tacit commitment to continued disclosure, I find that informational uniqueness is associated with a higher propensity by firms to provide ongoing bundled guidance. Overall, I find a strong negative relationship between informational uniqueness and the quality of corporate information environment only among firms without regular bundled guidance. This suggests that, while informational uniqueness can generate significant information deficiency, firms with strong tacit disclosure commitment are able to largely compensate for the lack of information spillover from peers.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84234107","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study Pareto optimal policy reforms aimed at overhauling retirement financing as an integral part of the tax and transfer system. Our framework for policy analysis is a heterogeneous‐agent overlapping‐generations model that performs well in matching the aggregate and distributional features of the U.S. economy. We present a test of Pareto optimality that identifies the main source of inefficiency in the status quo policies. Our test suggests that lack of asset subsidies late in life is the main source of inefficiency when annuity markets are incomplete. We solve for Pareto optimal policy reforms and show that progressive asset subsidies provide a powerful tool for Pareto optimal reforms. On the other hand, earnings tax reforms do not always yield efficiency gains. We implement our Pareto optimal policy reform in an economy that features demographic change. The reform reduces the present discounted value of net resources consumed by each generation by about 7 to 11 percent in the steady state. These gains amount to a one‐time lump‐sum transfer to the initial generation equal to 10.5 percent of GDP.
{"title":"Retirement Financing: An Optimal Reform Approach","authors":"R. Hosseini, A. Shourideh","doi":"10.2139/SSRN.2718451","DOIUrl":"https://doi.org/10.2139/SSRN.2718451","url":null,"abstract":"We study Pareto optimal policy reforms aimed at overhauling retirement financing as an integral part of the tax and transfer system. Our framework for policy analysis is a heterogeneous‐agent overlapping‐generations model that performs well in matching the aggregate and distributional features of the U.S. economy. We present a test of Pareto optimality that identifies the main source of inefficiency in the status quo policies. Our test suggests that lack of asset subsidies late in life is the main source of inefficiency when annuity markets are incomplete. We solve for Pareto optimal policy reforms and show that progressive asset subsidies provide a powerful tool for Pareto optimal reforms. On the other hand, earnings tax reforms do not always yield efficiency gains. We implement our Pareto optimal policy reform in an economy that features demographic change. The reform reduces the present discounted value of net resources consumed by each generation by about 7 to 11 percent in the steady state. These gains amount to a one‐time lump‐sum transfer to the initial generation equal to 10.5 percent of GDP.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"75 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86400052","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Many retailers have recently started to offer customers the option to buy online and pick up in store (BOPS). We study the impact of the BOPS initiative on store operations. We build a stylized model where a retailer operates both online and offline channels. Consumers strategically make channel choices. The BOPS option affects consumer choice in two ways: by providing real-time information about inventory availability and by reducing the hassle cost of shopping. We obtain three findings. First, not all products are well-suited for in-store pickup; specifically, it may not be profitable to implement BOPS on products that sell well in stores. Second, BOPS enables retailers to reach new customers, but for existing customers, the shift from online fulfillment to store fulfillment may decrease profit margins when the latter is less cost effective. Finally, in a decentralized retail system where store and online channels are managed separately, BOPS revenue can be shared across channels to alleviate incentive conflicts; it is rarely efficient to allocate all the revenue to a single channel.
{"title":"Omnichannel Retail Operations with Buy-Online-and-Pickup-in-Store","authors":"Fei Gao, Xuanming Su","doi":"10.1287/mnsc.2016.2473","DOIUrl":"https://doi.org/10.1287/mnsc.2016.2473","url":null,"abstract":"Many retailers have recently started to offer customers the option to buy online and pick up in store (BOPS). We study the impact of the BOPS initiative on store operations. We build a stylized model where a retailer operates both online and offline channels. Consumers strategically make channel choices. The BOPS option affects consumer choice in two ways: by providing real-time information about inventory availability and by reducing the hassle cost of shopping. We obtain three findings. First, not all products are well-suited for in-store pickup; specifically, it may not be profitable to implement BOPS on products that sell well in stores. Second, BOPS enables retailers to reach new customers, but for existing customers, the shift from online fulfillment to store fulfillment may decrease profit margins when the latter is less cost effective. Finally, in a decentralized retail system where store and online channels are managed separately, BOPS revenue can be shared across channels to alleviate incentive conflicts; it is rarely efficient to allocate all the revenue to a single channel.","PeriodicalId":80976,"journal":{"name":"Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania","volume":"81 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2016-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79012749","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Comparative labor law journal : a publication of the U.S. National Branch of the International Society for Labor Law and Social Security [and] the Wharton School, and the Law School of the University of Pennsylvania
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