This paper studies the channel choice problem in an e-retailing market when a reseller and an agency seller are experimenting with a new format, i.e., a hybrid retailing strategy. Under this ...strategy, the reseller not only sells products to consumers directly, but also expands the market in collaboration with the agency seller who operates a platform. However, the motivation and effectiveness of this strategy are not clear. Therefore, we develop game-theoretic models to investigate retail and wholesale prices, and the equilibrium channel choice. First, we find that the hybrid retailing strategy results in a higher retail price for the reseller; in contrast, the agency seller prefers to reduce the retail price when the fraction of market demand through the hybrid retailing channel is large. Second, we find that the hybrid retailing strategy can benefit all stakeholders when the fraction of market demand through the hybrid retailing channel is small. Third, under a dual retailing channel with price competition, a reseller and an agency seller are still willing to collaborate through a hybrid retailing strategy, because the cost of market expansion caused by this strategy is partly transferred to the manufacturer. Our results can provide meaningful decision support and operational rules for stakeholders to make strategic retail decisions.
•The hybrid retailing strategy results in a negative impact for the reseller.•An agency seller with a larger market demand prefers to reduce the retail price.•The hybrid retailing strategy is not a dominant strategy and results in price discrimination.
Prepandemic, small business exits were expected to increase dramatically owing to pent-up supply and the aging business owner population. COVID-19 may have dampened those expectations because of ...increasing information asymmetries that limited selling options for the small business owner (SBO). SBOs exit for many reasons (e.g., illness, family, retirement), so postponing a sale may not be a viable option. Alternately, SBOs can absorb crisis uncertainty by accepting different deal terms. We propose that one such strategy is to include seller financing as part of the deal terms, thereby signaling to the acquirer the SBOs’ confidence that the purchase is sound. We examine the results of 1,909 exit transactions from both before and after the financial crisis of 2007–2009 and over a 10-year postcrisis horizon. We find that sellers accept a lower price and less favorable terms with increased seller financing in the 24 months postcrisis, and that waiting longer to sell after the crisis improves deal terms for sellers, as this affords SBOs time to exit. Additionally, reduced information asymmetry improves deal terms. Finally, we provide strategies for SBOs to lower information asymmetry in small business exits.
•Issuers’ ESG scores negatively predict future bond short interest ratio.•Results are robust to controlling for various bond characteristics and using individual ESG pillar scores.•Changes in ESG ...scores can predict future changes in bond ratings. Bonds with declining ESG scores are more likely to have their ratings downgraded in the future, whereas those with improving ESG scores tend to be upgraded.
This paper explores the effect of ESG ratings on corporate bond short interest. Using corporate bond data from 2006 to 2022, we show that higher issuers’ ESG scores are associated with lower bond short interest. Further examination reveals that changes in ESG scores can predict future changes in bond ratings. Overall, our findings suggest that bond short sellers consider issuers’ ESG scores as valuable indicators in making investment decisions.
Returns and consumer fairness concerns put a huge pressure on manufacturers who sell their products online. The optimal selling format and return freight strategy become particularly important for ...manufacturers in an e-commerce supply chain. Therefore, we build game models for the following scenarios under different selling formats: the seller bearing the return freight costs or the return-freight insurance premiums, consumers buying insurance for themselves, and no one buying insurance. By comparing the optimal solutions of the game models under reselling and agency formats, several conclusions are derived. In the agency format, if the return-freight insurance premium is higher than a particular threshold, then the optimal strategy of the manufacturer is to decrease the selling price to encourage consumers to purchase the insurance, otherwise, the manufacturer should purchase the insurance. As the level of consumer fairness concerns and platform commission rates increase, the manufacturer should gradually move from the agency to reselling format. In the reselling format, if the return-freight insurance premium is lower than a particular threshold, then consumers will purchase insurance and this will make the platform more profitable, and conversely, the platform should bear the return freight costs.
Price experimentation is an important tool for firms to find the optimal selling price of their products. It should be conducted properly, since experimenting with selling prices can be costly. A ...firm, therefore, needs to find a pricing policy that optimally balances between learning the optimal price and gaining revenue. In this paper, we propose such a pricing policy, called controlled variance pricing (CVP). The key idea of the policy is to enhance the certainty equivalent pricing policy with a taboo interval around the average of previously chosen prices. The width of the taboo interval shrinks at an appropriate rate as the amount of data gathered gets large; this guarantees sufficient price dispersion. For a large class of demand models, we show that this procedure is strongly consistent, which means that eventually the value of the optimal price will be learned, and derive upper bounds on the regret, which is the expected amount of money lost due to not using the optimal price. Numerical tests indicate that CVP performs well on different demand models and time scales.
This paper was accepted by Assaf Zeevi, stochastic models and simulation.
Online retail platforms have increasingly utilized big data technologies to gather demand information, which is then shared with upstream manufacturers employing various selling modes, including a ...hybrid format that encompasses both direct and indirect selling. Previous studies have suggested that platforms should refrain from sharing demand information with manufacturers engaged in indirect selling. In this study, we present a game‐theoretic model to examine the factors influencing the online platform's decision to share information with an indirect selling manufacturer and under what conditions. Our initial analysis, considering exogenous selling formats in the base model, reveals that the platform's information sharing behavior is primarily influenced by selling format structures, commission fee rates, and competition intensity. The platform always has an incentive to share information with direct selling manufacturers; however, under a hybrid selling format, information sharing with indirect selling manufacturers may occur, particularly when both the commission fee rate and competition intensity are relatively high. We extend our investigation to explore the platform's optimal format‐dependent information sharing behavior, accounting for manufacturers' endogenous selling format decisions, and demonstrate the robustness of our main findings from the base model. Overall, our research offers valuable insights and guidelines to assist online platforms in making informed decisions about their information sharing practices.
•Introduction of private brands may benefit the manufacturer.•The manufacturer may benefit more with a higher proportional fee.•Investment effect can act as a buffer when the manufacturer is faced ...with threats.•The manufacturer prefers the agency mode after private-brand introduction.•If investment efficiency is high, the manufacturer prefers the reselling mode after private-brand introduction.
This paper investigates the effect of a platform’s private-brand introduction on a manufacturer that sells products through that platform by considering the investment effect and selling mode. We first analyze the role of the private brand and the investment effect on the manufacturer under the reselling mode and the agency mode, respectively. We then examine how the private brand introduction and the investment effect impact the manufacturer’s optimal selling mode choice. The introduction of a private brand is believed to threaten manufacturers that sell goods through the platform. However, we find that, in the reselling mode, a manufacturer can benefit from private-brand introduction through the increased demand and wholesale price generated by the platform’s increased marketing investment, as long as the competition intensity remains relatively low. In the agency mode, the manufacturer benefits more with a higher proportional fee after private-brand introduction. Further, the investment effect can act as a buffer, making the manufacturer more robust when facing threats. Also, after private-brand introduction, the manufacturer prefers the agency mode, but when it comes to investment and high investment efficiency, it is wiser for the manufacturer to keep reselling when facing private-brand introduction.
We study if government response to the novel coronavirus COVID-19 pandemic can mitigate investor herding behaviour in international stock markets. Our empirical analysis is informed by daily stock ...market data from 72 countries from both developed and emerging economies in the first quarter of 2020. The government response to the COVID-19 outbreak is measured by means of the Oxford COVID-19 Government Response Tracker, where higher scores are associated with greater stringency. Three main findings are in order. First, results show evidence of investor herding in international stock markets. Second, we document that the Oxford Government Response Stringency Index mitigates investor herding behaviour, by way of reducing multidimensional uncertainty. Third, short-selling restrictions, temporarily imposed by the national and supranational regulatory authorities of the European Union, appear to exert a mitigating effect on herding. Finally, our results are robust to a range of model specifications.
•We study herding behaviour in international stock markets during the COVID-19 pandemic.•Investors show herding behaviour during the COVID-19 pandemic crisis.•Government responses to COVID-19 alleviate herding behaviour.•Short-selling restrictions during COVID-19 alleviate herding behaviour.
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