Problem definition: Customer reviews are essential to online marketplaces. However, reviews typic... more Problem definition: Customer reviews are essential to online marketplaces. However, reviews typically vary; ratings of a product or service are rarely the same. In many service marketplaces, especially the ones for solar panel installations, supply-side participants are active. That is, a seller must make a proposal to serve each customer. In such marketplaces, it is not clear how (or if) the dispersion in customer reviews affects the seller activity level and number of matches in the marketplace. Our paper examines this by considering both ratings and text reviews. Academic/Practical Relevance: To our knowledge, this is the first paper that empirically studies how the review dispersion affects a seller's activity level and the number of matches in an online marketplace with active sellers. Distinct from literature, we examine the relationship between the review dispersion and supply-side activities in an online service marketplace. Methodology: We collaborated with one of the largest online solar marketplaces in the U.S. that connects potential solar panel adopters with installers. We obtained a unique dataset from the marketplace for 2013 - 2018. We complement this with public datasets. Our analysis uses traditional econometrics methods, a clustering method, and the deep-learning-based natural-language-processing model BERT developed by Google AI. Results: We find that the dispersion in customer reviews has a significant and inverted U-shaped effect on an installer's marketplace activity level. Specifically, the installer's activity level increases with the review dispersion if and only if that dispersion is below a certain threshold. Above that threshold, more dispersion in reviews lowers the installer's activity level. Intuitively, a marketplace operator would favor having more sellers with perfect ratings. In contrast, we identify a significant and inverted U-shaped relationship between the market-level review dispersion and transactions. Managerial Implications: Our findings provide valuable insights to marketplace operators about the implications of review dispersions, and call for innovative platform design.
As waste from used electronic products grows steadily, manufacturers face take‐back regulations m... more As waste from used electronic products grows steadily, manufacturers face take‐back regulations mandating its collection and proper treatment through recycling, or remanufacturing. Environmentalists greet such regulation with enthusiasm, but its effect on remanufacturing activity and industry competition remains unclear. We research these questions, using a stylized model with an original equipment manufacturer (OEM) facing competition from an independent remanufacturer (IR). We examine the effects of regulation on three key factors: remanufacturing levels, consumer surplus, and the OEM profit. First, we find that total OEM remanufacturing actually may decrease under high collection and/or reuse targets, meaning more stringent targets do not imply more remanufacturing. Consumer surplus and the OEM profit, meanwhile, may increase when OEM‐IR competition exists in a regulated market. Finally, through a numerical study, we investigate how total welfare changes in the collection target,...
AbstractWhile most of its previous developments have focused on products, services, and infrastru... more AbstractWhile most of its previous developments have focused on products, services, and infrastructure, India is also beginning to play a major role in healthcare. On a recent business visit to Apollo Hospitals1 in Delhi, an MBA student commented that she was surprised at the level of healthcare technology available in India. I replied, “Me too.” In 1982, I had to be rushed to a small private hospital with minimal amenities for emergency surgery after I was told I would have to wait at least 72 hours for the procedure at the large and very popular government hospital. It turned out that most of the doctors were on leave to celebrate the opening ceremony of the Asian Games in Delhi. A lot has changed in India in terms of the availability of medical care in urban areas in the last 25 years. Medical tourism — in which foreign nationals come to India to get various types of surgeries performed at a lower cost than in their home countries — has played a major part in this development. A liver transplant might cost USD45,000 in India, as compared to USD140,000 in Europe or USD280,000 in the United States, while heart surgery that costs about USD5000 in India would be close to USD30,000 in the United States. It is expected that by 2012 medical tourism will become a USD2.1 billion industry in India…
AbstractA couple of years ago, as I was watching the “swoosh” of the Nike logo being printed on T... more AbstractA couple of years ago, as I was watching the “swoosh” of the Nike logo being printed on T-shirts at the Intimate Active Wear factory in Bangalore,a I realized that India had finally joined the global manufacturing network. In fact, textiles make up 14% of India's total industrial production, constituting 4% of its GDP and 17% of its total export earnings. Since liberalization, the Indian textiles industry has grown significantly, from USD27 billion in 2005 to USD49 billion in 2007. India currently exports textile products and handicrafts to more than 100 countries. Continuing the centuries-old tradition, Europe remains India's major export market, with a 22% market share in textiles and 43% in apparel, while the United States is the largest single buyer of Indian textiles (19% share) and apparel (32.6%). Recently, India overtook the United States to become the world's second-largest cotton-producing country after China, according to a study by the International Service for the Acquisition of Agri-biotech Applications. It is no surprise that the textile industry is the largest foreign exchange earning sector in the country. The industry employs over 35 million people, and with its continuing growth momentum, its role in the Indian economy is bound to increase. The Indian sourcing market is estimated to grow at an average annual rate of 12%, from an expected market size of USD22–25 billion in 2008 to USD35–37 billion by 2011.1 All of the above factors have led some key international fashion brands, such as Hugo Boss, Diesel, and Liz Claiborne, to increase their sourcing from India…
We consider a manufacturer serving a retailer who sells its product to customers over two periods... more We consider a manufacturer serving a retailer who sells its product to customers over two periods. Each firm determines its unit price. The retailer orders the product from the manufacturer prior to the beginning of the selling periods. We consider two types of customers: strategic customers who take their future options into account and time their purchases accordingly, and myopic customers who consider only their current options. We compare the resulting equilibria for these two scenarios and evaluate the impact of customers' strategic behavior. We find that strategic customer behavior always benefits the manufacturer. Interestingly, it may also improve profitability of the retailer and the entire supply chain in some cases. Strategic customer behavior and decentralization are often regarded as detriments to supply chain performance. We find that, however, the combination of these two factors may not result in the worst supply chain performance. When customers are sufficiently patient, a decentralized supply chain that faces strategic customers actually outperforms the supply chain with only one of those factors at play. Finally, we show that when customers are strategic, the retailer's and manufacturer's profits with price commitment, availability commitment or quick response can be lower than those when customers are myopic.
Problem definition: Customer reviews are essential to online marketplaces. However, reviews typic... more Problem definition: Customer reviews are essential to online marketplaces. However, reviews typically vary; ratings of a product or service are rarely the same. In many service marketplaces, especially the ones for solar panel installations, supply-side participants are active. That is, a seller must make a proposal to serve each customer. In such marketplaces, it is not clear how (or if) the dispersion in customer reviews affects the seller activity level and number of matches in the marketplace. Our paper examines this by considering both ratings and text reviews. Academic/Practical Relevance: To our knowledge, this is the first paper that empirically studies how the review dispersion affects a seller's activity level and the number of matches in an online marketplace with active sellers. Distinct from literature, we examine the relationship between the review dispersion and supply-side activities in an online service marketplace. Methodology: We collaborated with one of the largest online solar marketplaces in the U.S. that connects potential solar panel adopters with installers. We obtained a unique dataset from the marketplace for 2013 - 2018. We complement this with public datasets. Our analysis uses traditional econometrics methods, a clustering method, and the deep-learning-based natural-language-processing model BERT developed by Google AI. Results: We find that the dispersion in customer reviews has a significant and inverted U-shaped effect on an installer's marketplace activity level. Specifically, the installer's activity level increases with the review dispersion if and only if that dispersion is below a certain threshold. Above that threshold, more dispersion in reviews lowers the installer's activity level. Intuitively, a marketplace operator would favor having more sellers with perfect ratings. In contrast, we identify a significant and inverted U-shaped relationship between the market-level review dispersion and transactions. Managerial Implications: Our findings provide valuable insights to marketplace operators about the implications of review dispersions, and call for innovative platform design.
As waste from used electronic products grows steadily, manufacturers face take‐back regulations m... more As waste from used electronic products grows steadily, manufacturers face take‐back regulations mandating its collection and proper treatment through recycling, or remanufacturing. Environmentalists greet such regulation with enthusiasm, but its effect on remanufacturing activity and industry competition remains unclear. We research these questions, using a stylized model with an original equipment manufacturer (OEM) facing competition from an independent remanufacturer (IR). We examine the effects of regulation on three key factors: remanufacturing levels, consumer surplus, and the OEM profit. First, we find that total OEM remanufacturing actually may decrease under high collection and/or reuse targets, meaning more stringent targets do not imply more remanufacturing. Consumer surplus and the OEM profit, meanwhile, may increase when OEM‐IR competition exists in a regulated market. Finally, through a numerical study, we investigate how total welfare changes in the collection target,...
AbstractWhile most of its previous developments have focused on products, services, and infrastru... more AbstractWhile most of its previous developments have focused on products, services, and infrastructure, India is also beginning to play a major role in healthcare. On a recent business visit to Apollo Hospitals1 in Delhi, an MBA student commented that she was surprised at the level of healthcare technology available in India. I replied, “Me too.” In 1982, I had to be rushed to a small private hospital with minimal amenities for emergency surgery after I was told I would have to wait at least 72 hours for the procedure at the large and very popular government hospital. It turned out that most of the doctors were on leave to celebrate the opening ceremony of the Asian Games in Delhi. A lot has changed in India in terms of the availability of medical care in urban areas in the last 25 years. Medical tourism — in which foreign nationals come to India to get various types of surgeries performed at a lower cost than in their home countries — has played a major part in this development. A liver transplant might cost USD45,000 in India, as compared to USD140,000 in Europe or USD280,000 in the United States, while heart surgery that costs about USD5000 in India would be close to USD30,000 in the United States. It is expected that by 2012 medical tourism will become a USD2.1 billion industry in India…
AbstractA couple of years ago, as I was watching the “swoosh” of the Nike logo being printed on T... more AbstractA couple of years ago, as I was watching the “swoosh” of the Nike logo being printed on T-shirts at the Intimate Active Wear factory in Bangalore,a I realized that India had finally joined the global manufacturing network. In fact, textiles make up 14% of India's total industrial production, constituting 4% of its GDP and 17% of its total export earnings. Since liberalization, the Indian textiles industry has grown significantly, from USD27 billion in 2005 to USD49 billion in 2007. India currently exports textile products and handicrafts to more than 100 countries. Continuing the centuries-old tradition, Europe remains India's major export market, with a 22% market share in textiles and 43% in apparel, while the United States is the largest single buyer of Indian textiles (19% share) and apparel (32.6%). Recently, India overtook the United States to become the world's second-largest cotton-producing country after China, according to a study by the International Service for the Acquisition of Agri-biotech Applications. It is no surprise that the textile industry is the largest foreign exchange earning sector in the country. The industry employs over 35 million people, and with its continuing growth momentum, its role in the Indian economy is bound to increase. The Indian sourcing market is estimated to grow at an average annual rate of 12%, from an expected market size of USD22–25 billion in 2008 to USD35–37 billion by 2011.1 All of the above factors have led some key international fashion brands, such as Hugo Boss, Diesel, and Liz Claiborne, to increase their sourcing from India…
We consider a manufacturer serving a retailer who sells its product to customers over two periods... more We consider a manufacturer serving a retailer who sells its product to customers over two periods. Each firm determines its unit price. The retailer orders the product from the manufacturer prior to the beginning of the selling periods. We consider two types of customers: strategic customers who take their future options into account and time their purchases accordingly, and myopic customers who consider only their current options. We compare the resulting equilibria for these two scenarios and evaluate the impact of customers' strategic behavior. We find that strategic customer behavior always benefits the manufacturer. Interestingly, it may also improve profitability of the retailer and the entire supply chain in some cases. Strategic customer behavior and decentralization are often regarded as detriments to supply chain performance. We find that, however, the combination of these two factors may not result in the worst supply chain performance. When customers are sufficiently patient, a decentralized supply chain that faces strategic customers actually outperforms the supply chain with only one of those factors at play. Finally, we show that when customers are strategic, the retailer's and manufacturer's profits with price commitment, availability commitment or quick response can be lower than those when customers are myopic.
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