Contracting for infrastructure projects as credence goods

Large infrastructure projects are a major responsibility of urban and regional governments, who usually lack expertise to fully specify the demanded projects. Contractors, typically experts on such projects due to experience with similar projects,advise of the needed design as well as the cost of construction in their bids. Producing the right design is costly. We model such infrastructure projects taking into account their credence goods feature and the costly design effort they require and examine the performance of commonly used contracting methods. We show that when building costs are homogeneous and public information, simultaneous bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search. If building costs are private information of the contractors and are revealed to them after design cost is sunk,sequential search may be superior to simultaneous bidding.

Commercial friendships between gay sales associates and straight female customers in luxury settings: A proposed theoretical framework

This study investigates friendships between gay sales associates and heterosexual female customers in luxury retail settings. By employing grounded theory methodology, the study integrates theories and findings from diverse literature streams into an original conceptual framework to illustrate the resources gay sales associates and straight female customers receive from and provide to each other during retail exchanges. The study explains why gay male–straight female friendships are uniquely suited for luxury consumption settings. Female customers characterize their friendships with gay sales associates as providing honesty, security, trust, and comfort, which stems from the absence of sexual interest and a lack of inter-female competition. Gay sales associates receive acceptance for who they are and for their displays of unconventional masculinity in retail settings. They also obtain a temporary rite from their female customers, a so-called mandate of privacy, which permits both parties to ignore the bounds of modesty and accept a degree of intimacy. Such intimacy facilitates transactions that require both personalization and customer–employee closeness, such as the selling of high-end apparel, accessories, and jewelry.

Regulating unilateral supermarket misconduct as customer/acquirer of goods and services

Supermarkets in Australia may have substantial market power as buyers in wholesale markets for grocery products. They may also have substantial bargaining power in negotiating contracts with their suppliers of grocery products. The Competition and Consumer Act 2010 (Cth) (CCA) regulates misconduct by supermarkets as customer/acquirers in three ways. First, s 46(1) of the CCA prohibits the ‘taking advantage’ of buyer power for the purpose of damaging a competitor, preventing entry or deterring or preventing competitive conduct. Secondly, s 21 of the ACL prohibits unconscionable conduct in business–to–business transactions. Thirdly, Pt IVB of the CCA provides for the promulgation of mandatory and voluntary industry codes of conduct. Since 1 July 2015 the conduct of supermarkets as customer/acquirers has been regulated by the Food and Grocery Industry Code of Conduct. This article examines these three different approaches. It considers them against the background of the misconduct at issue in ACCC v Coles Supermarkets Australia Pty Ltd which the ACCC chose to litigate as an unconscionable conduct case, rather than a misuse of market power case. The article also considers the strengths and weaknesses of each of the three approaches and concludes that while the three approaches address different problems there is scope for overlap and all three should be retained for compete coverage.

Interior of the Konservenfabrik E. Arnold und Co. (Arnold and Co. canned goods factory); Fuerth, Bavaria Business Establishments; Factories

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Interior of the Konservenfabrik E. Arnold und Co. (Arnold and Co. canned goods factory); Fuerth, Bavaria Business Establishments; Factories

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How social preferences shape incentives in (experimental) markets for credence goods

Credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus-maximising quality. While standard theory predicts that equal mark-up prices solve the credence goods problem if customers can verify the quality received, experimental evidence indicates the opposite. We identify a lack of robustness with respect to heterogeneity in social preferences as a possible cause of this and conduct new experiments that allow for parsimonious identification of sellers’ social preference types. Our results confirm the assumed heterogeneity in social preferences and provide strong support for our explanation of the failure of verifiability to increase efficiency.

Ett' varttuisi Suomenmaa : Suomalaisten kasvattaminen kulutusyhteiskuntaan kotimaisissa lyhytelokuvissa 1920-1969

The birth of the Modern Consumer Society in Finnish short films 1920-1969 The main subject of this research is Finnish short films in 1920-1969. These short films were produced by film studios for private enterprises, banks, advisory organizations, communities and the state. The evolution of short films on consumer affairs was greatly influenced by a special tax reduction system that was introduced in 1933 and lasted until 1964. The tax reduction system increased the production volumes of educational short films significantly. This study covers 342 Finnish short films, more than any other study in the field before this. The aim of this research is to examine how short films introduced Finns to modern consumer society. The cinemagoers were an excellent target group for different advisory groups as well as advertisers. Short films were used by organizations and private enterprises from very early on. In the 1920's Finns were still living in rural areas and agriculture was the dominant industry. Consumer society was still in its infancy, and the prevalent attitude to industrially produced goods was that of suspicion. From the cultural and ideological point of view the evolution of trust was one of the first steps towards the birth of the consumer society. Short films were an excellent means for helping to transform public attitudes. During the war period short films were an important means of propaganda. Short films were produced in abundance and shown for big audiences. They guided people how to survive shortages caused by the war. Even though the idea of rationalization was presented in short films somewhat in the 1920's and 1930's it became a national virtue during the war period. The idea of rationalization widened from the industry to households expecially in the late 1940's and the 1950's. New household apparati and the way in which daily chores were taken care of were presented not as luxury consumption but as a way of rationalization and saving money and effort. Banks and the advisory organizations guided the public to save their money for a specific target. Short films were use to help the public to acceps industrial goods and the notions of planning and saving. The ideological change from an agrarian society to consumer society was based on old acricultural ideas and self-sufficiency was evolved into rational and economizing consumerism. This made Finnish consumer society to value durable consumer goods and own homes. The public was also encouraged to consider their own decisions in the national context - especially after the second world war Finland laced capital, and personal savings were strongly presented as a way to help the whole nation. Modern hedonistic values were not dominant in Finland in the1950's and 1960's. Initial traces of modern hedonism can be seen in the films, but they were only marginal paths in the bigger.

Predicting price-tag for customized goods

We discuss a dynamic pricing model which will aid automobile manufacturer in choosing the right price for customer segment. Though there is oligopoly market structure, the customers get "locked" into a particular technology/company which virtually makes the situation akin to a monopoly. There are associated network externalities and positive feedback. The key idea in monopoly pricing lies in extracting the customer surplus by exploiting the respective elasticities of demand. We present a Walrasian general equilibrium approach to determine the segment price. We compare the prices obtained from optimization model with that from Walrasian dynamics. The results are encouraging and can serve as a critical factor in Customer Relationship Management (CRM) and thereby effectively manage the lock-in.

Environmental evaluation of localising production as a strategy for sustainable development: a case study of two consumer goods in Jamaica

The objective of this study was to compare the life-cycle environmental impacts of changed production structures for two consumer goods (high-density polyethylene (HDPE) shopping bags and beds) in Jamaica. A scenario technique was used to construct three alternative production structures for each product; each scenario reflecting an increase in local production in Jamaica which depended on an increased supply of input materials which may be sourced: (1) externally from overseas suppliers, (2) from post-consumer recycling, and (3) locally on the island of Jamaica. These three constructed scenarios were then compared to the existing supply chain or reference scenarios of the products. The results showed that for both case products the recycling scenario was most preferable for localising production, resulting in the lowest environmental impact. This was because the production of raw materials accounted for the largest effect on total environmental impact. As such, the most immediate environmental improvements were realised by lowering the production of virgin materials. © 2007 Elsevier Ltd. All rights reserved.

Mergers in Durable Goods Industries

Revised 2008-11.-- Published as an article in: Journal of Economic Behavior & Organization, 2008, 68, pp. 691-701.

Non-Stationary Demand in a Durable Goods Monopoly

In a context where demand for the services of a durable good changes over time, and this change may be uncertain, the paper shows that social welfare may be higher when the monopolist seller can commit to any future price level she wishes than when she cannot. Moreover, the equilibrium under a monopolist with commitment power may Pareto-dominate the equilibrium under a monopolist without commitment ability. These results affect the desired regulation of a durable goods monopolist in this context.