REVISION: Customer Preference and Station Network in the London Bike Share System
We study customer preference for the bike share system in the city of London. We estimate a structural demand model on the station network to learn the preference parameters and use the estimated model to provide insights on the design and expansion of the bike share system. We highlight the importance of network effects in understanding customer demand and evaluating expansion strategies of transportation networks. In the particular example of the London bike share system, we show that the currently implemented station density rule is far from ideal. We develop a new method to deal with the endogeneity problem of the choice set in estimating demand for network products. Our method can be applied to other settings, in which the available set of products or services depends on demand.
REVISION: Bike-Share Systems: Accessibility and Availability
The cities of Paris, London, Chicago, and New York (among many others) have set up bike-share systems to facilitate the use of bicycles for urban commuting. This paper estimates the impact of two facets of system performance on bike-share ridership: accessibility (how far the user must walk to reach stations) and bike-availability (the likelihood of finding a bicycle). We obtain these estimates from a structural demand model for ridership estimated using data from the Vélib’ system in Paris. We find that every additional meter of walking to a station decreases a user’s likelihood of using a bike from that station by 0.194% (±0.0693%), the reduction is even more significant at higher distances (>300m). These estimates imply that almost 80% of bike-share usage comes from areas within 300m of stations, highlighting the need for dense station networks. We find that a 10% increase in bike-availability would increase ridership by 12.211% (±1.097%), three-fourths of which comes from fewer ...
REVISION: Supply Networks for Relational Sourcing
Making long-term commitments to exclusive suppliers, or relational sourcing, is critical in industries where quality includes social, ethical, and technical elements concerning which contractual terms would be costly to verify or enforce. This study identifies supplier network topologies that best facilitate such relational sourcing. We consider a brand-owning firm that sources in an ongoing fashion from a general multi-tier network of idiosyncratic suppliers. Alternate network designs are compared in terms of three defining structural properties: network scope, the number of suppliers at each tier in the network; degree of control/delegation, the number of tiers in the network; and network connectivity, the connections between firms located at different tiers. Our analysis reveals that neither network connectivity nor the distribution of costs among suppliers affects the ability to sustain relational sourcing. Networks characterized by more delegation or less scope have the most to ...
REVISION: Grocery Store Density and Food Waste
Problem Definition: We study the impact of grocery-store density on the food waste generated at stores and households.
Relevance: Food waste is a major contributor to carbon emissions (as big as road transport). Identifying and influencing market conditions that can decrease food waste is thus important to combat global warming.
Methodology: We build and calibrate a stylized two-echelon perishable-inventory model to capture grocery purchases and expiration at competing stores and households in a market. We examine how the equilibrium waste in this model changes with store density.
Results: An increase in store density decreases consumer waste due to improved access to groceries, while increasing retail waste due to decentralization of inventory, increased variability propagation in the supply chain (cycle truncation) and diminished demand by customers. Higher density also induces more competition which further increases (decreases) waste when stores compete on prices ...
REVISION: The Use and Value of Social Information in Selective Selling of Exclusive Products
We consider the use and value of social network information in selectively selling goods and services whose value derives from exclusive ownership among network connections or friends. Our stylized model accommodates customers who are heterogeneous in their number of friends (degree) and their proclivity for social comparisons (conspicuity). Firms with information on either (or both) of these characteristics can use it to make a product selectively available to desired customers to manage the trade-off between exclusivity and sales. We find that, in contrast with the practice of targeting high degree customers, the firm’s best targets are, in fact, high-conspicuity customers within intermediate degree segments. Interestingly, we find that degree-information is systematically more valuable than conspicuity-information. Analyses of many model variants, and of scenarios with personalized pricing and full graph information, suggest that there are two canonical categories of social ...
REVISION: Online Grocery Retail: Revenue Models and Environmental Impact
This paper compares the financial and environmental performance of two revenue models for the online retailing of groceries: the per-order model, where customers pay for each delivery; and the subscription model, where customers pay a set fee and receive free deliveries. We build a stylized model that incorporates (i) customers with ongoing uncertain grocery needs and who choose between shopping offline or online and (ii) an online retailer that makes deliveries through a proprietary distribution network. We find that subscription incentivizes smaller and more frequent grocery orders, which reduces food waste and creates more value for the customer; the result is higher retailer revenues, lower grocery costs, and potentially higher adoption rates. These advantages are countered by greater delivery-related travel and expenses, which are moderated by area geography and routing-related scale economies. Subscription also leads to lower food waste-related emissions but to higher ...
New: The Benefits of Decentralized Decision-Making in Supply Chains
The inefficiency of decentralized decision-making is one of the most influential findings of the supply chain coordination literature. This paper shows that with the possibility of continuing trade, decentralization can be beneficial in improving supply chain performance. In a supply chain with decentralized decision-making and continuing trade, it is easier to incentivize players to coordinate on efficient actions. There are more gains to be shared from coordination, and by virtue of each ...
REVISION: The Relational Advantages of Intermediation
This paper provides a novel explanation for the use of supply chain intermediaries such as Li & Fung Ltd.. We find that even in the absence of the well-known transactional and informational advantages of mediation, intermediaries improve supply chain performance. In particular, intermediaries facilitate responsive adaptation of the buyers’ supplier base to their changing needs while simultaneously ensuring that suppliers behave as if they had long-term sourcing commitments from buying firms ...