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When externalities are present, is the inclusion of the affected stakeholders in the firm's decision process a better solution than the shareholder governance? This paper argues that the internalization of the externality hinges on the available information and the market strategy used by the firm rather than its governance structure. In the absence of income effects (i.e., if preferences are quasi-linear), a market for "customer rights" reveals all the necessary information about the surplus of a homogeneous consumer population. In that case, a Coase-type equivalence obtains: whether the firm uses the information in the interest of its shareholders or all its stakeholders, the outcome in each case is an efficient allocation. With income effects, the market for customer rights may fail. Still, if appropriate information can be obtained, efficiency can be achieved under both governance structures (or neither). [ABSTRACT FROM AUTHOR]

We model consumer choices for recreational cannabis in a risky environment and its supply under prohibition and legalization. While legalization reduces the profits of illegal providers, it increases cannabis consumption. This trade-off can be overcome by combining legalization with sanctions against the black market, and improvements to the quality of legal products. Numerical calibrations highlight how a policy mix can control the increase in cannabis consumption and throttle the illegal market. In the US, the eviction prices we predict to drive dealers out of business are much lower than the prices of legal cannabis in most of the states that opted for legalization, leaving room for the black market to flourish. Analyzing the compatibility of several policy goals sheds light on the less favorable outcomes of recent legalization reforms and suggests a new way forward. • Legalizing cannabis can reduce illegal providers' profits but increases consumption. • A policy-mix legalizing high-quality cannabis while enforcing sanctions against the black market overcomes this trade-off. • This policy-mix is compatible with a large set of government objectives. • These include maximizing consumer surplus as well as minimizing enforcement costs and negative externalities of illegal use. • Maximizing tax revenue is likely to leave room for illegal providers to operate. [ABSTRACT FROM AUTHOR]

This paper examines the welfare effects of market-based (permits, taxes) and choice-based (voluntary emission certifications, eco-labels) environmental policy. My analysis shows that choice-based eco-labels can be a welfare-improving policy. However, these welfare gains occur through "green" consumer surplus as opposed to (social benefiting) emission reductions while emission taxes and permits increase welfare by causing "dirtier" or less efficient firms to leave the market. Although greater environmental conscientiousness makes eco-labeling an effective tool to improve overall welfare, eco-labels are not as effective at reducing environmental damage relative to traditional market-based emission taxes or permits. Using research on consumer preferences and previously implemented environmental policies, the effectiveness of traditional emission taxes and eco-labeling programs are estimated. The results suggest that consumers participation in the eco-labeled product market benefits producers, but overall, eco-labeling programs are an inefficient policy tool relative to traditional market-based emission taxes or permits. [ABSTRACT FROM AUTHOR]

This is a comment on the paper by Irz et al. (2015) in this journal, on nutritional recommendations. Irz et al. (2015) propose to compute the cost of a nutritional constraint as the consumer loss of surplus, derived from their observed choices. Introducing behavioral biases into an extended version of their model, I show that their proposed methodology implicitly assumes that consumer dietary choices do not involve any health considerations. The cost per quality-adjusted life year that they compute should be corrected by the size of the bias of consumers to be compared with benchmark evaluations. [ABSTRACT FROM AUTHOR]

• Consider fresh product supply chains with consumer preferences. • Demand is sensitive to price and freshness level. • Comparisons of retail mode, dual-channel mode and O2O mode are conducted. • The dual-channel mode could outperform the O2O mode for the supplier. • The O2O mode brings the highest consumer surplus. This paper develops a supplier-retailer fresh product supply chain under three sales modes: retail mode, dual-channel mode, and O2O (Online-to-Offline) mode. For each mode, the optimal pricing and freshness-keeping decisions are investigated. It is shown that, in decentralized systems, the dual-channel mode could outperform the O2O mode for the supplier, while the retailer prefers O2O mode to retail mode and dual-channel mode. Under coordination, the O2O mode brings the highest supply chain profit; for consumer surplus, the dual-channel mode is not always better than the retail mode, but is always inferior to the O2O mode. [ABSTRACT FROM AUTHOR]

Considering consumers' preference for green consumption, firms provide independent main products alone to reduce the waste induced by repeated purchases of complementary products. This paper divides consumers into four types according to their greenness and previous purchase experiences, and theoretically investigates the advantages and disadvantages of the uniform pricing strategy and the differentiated pricing strategy for the main product and the bundled product. We find that: (i) the uniform pricing strategy ensures a stable pricing decision since the optimal price is irrelevant to consumers' preference for green consumption. In contrast, under the differentiated pricing strategy, the optimal prices of the bundled product and the main product decrease and increase with consumers' preference for green consumption, respectively. Under asymmetric information, the firm will misprice the products and accordingly suffer from a profit loss if it adopts the differentiated pricing strategy. (ii) When consumers' preference for green consumption is intermediate, the uniform pricing strategy dominates the differentiated pricing strategy for the firm, while for consumers and society, the differentiated pricing strategy is better. However, the information asymmetry may hurt consumer surplus and social welfare under the differentiated pricing strategy. Therefore, consumers have incentives to actively disclose their preference for green consumption to avoid damage. Then, a win-win-win (i.e., the firm, consumers, and society) situation will occur. [ABSTRACT FROM AUTHOR]