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Increasingly, durable goods have embedded software and are technologically tethered to the vendor's server through this software, be it digital products such as smartphones or predominantly non-digital products such as automobiles and tractors. Tethering can enable the vendor to change the product's performance or features through software updates, with implications for optimal product policy. We study a monopolist technology vendor's decision to partially degrade or fully retire their installed base of tethered goods when they release their newer version. Our work presents several novel theoretical contributions with practical implications for industry. Installed base degradation can emerge in equilibrium. To obsolete the previous version, it is no longer necessary for the seller to produce an improved version. Firms may engage in economically suboptimal partial degradation for technical reasons. Firms sometimes engage in suboptimal product obsolescence despite it harming their profit, due to their inability to commit to a no-obsolescence policy. Under some conditions the seller's commitment problem could cause them to offer excessive durability. Our work suggests important policy guidelines: when releasing new models, firms should consider releasing updated versions of their older operating systems, and allow existing customers to opt out of significant software upgrades, other than essential security patches. [ABSTRACT FROM AUTHOR]

This paper analyzes the time trend of household consumption in Japan between 1981 and 2020, using microdata from the Family Income and Expenditure Survey (FIES). We examine how the trends in the levels, shares, and growth of consumption vary across categories of consumption, items, and age groups, and assess changes in consumption inequality over time. Our analysis shows that consumption inequality mildly increased, driven primarily by the trend of service consumption and a shift in the age distribution. Additionally, we estimate the life-cycle profiles of consumption and find that the age component of total consumption follows a standard hump-shaped pattern, but varies significantly across goods and service categories and item groups. Finally, using the estimated age profiles of different consumption items, we project how aggregate consumption and its composition may evolve as Japan's population ages in the coming decades. [ABSTRACT FROM AUTHOR]

Purpose – This study aims to investigate the impact of local windfall gains from the Spanish Christmas lottery on household consumption behavior. Design/methodology/approach – The study applies differences-in-differences to assess permanent income hypothesis (PIH) validity, examining pre- and postlottery consumption effects. Additionally, it also uses an instrumental variable regression, using the lottery shock as an instrument for total expenditures, to estimate the Engel curves. Findings – The paper finds a PIH violation; households in winning region notably increase consumption on durable and nondurable goods compared to nonwinning ones. Moreover, durable goods consumption is responsive to lottery winnings, while nondurable goods consumption are unit-elastic to expenditure shocks. Originality/value – To the best of the author’s knowledge, this is the first paper analyzing the effects of winning regions of the Spanish Christmas lottery in all types of consumption goods, testing its consequences in the PIH and estimating its effects in the Engel curves.

Finding the Right Business Model for Durable Goods Technological advances enable new ways for customers to access durable goods such as heavy equipment without the need for ownership. In "Business Model Choice for Heavy Equipment Manufacturers," P. Blaettchen, N. Taneri, and S. Hasija analyze the resulting business models available to manufacturers, considering that manufacturers need to effectively coordinate their sales strategy with their highly profitable after-sales service activities and take into account secondary markets. Employing a game-theoretic framework, the authors show how different equipment characteristics lead to different optimal business model designs. They provide a comprehensive overview of when manufacturers should rely on emerging models based on servicization or peer-to-peer sharing and when it pays to retain a traditional model based on sales. Drawing on a novel framework for analyzing a business model's environmental impact, they further show that emerging models can create win-win situations for the manufacturer and the environment. Technological advances enable new business models for heavy equipment manufacturers wherein customers access equipment without ownership. We seek to understand the profitability and environmental performance of different emerging business models in light of salient economic and operational factors. We develop a game-theoretic model to identify the optimal choice between a traditional ownership-based business model and two access-based models: servicization and peer-to-peer sharing. After-sales services, equipment characteristics, usage environments, and fuel prices affect this choice. We also provide a novel framework to analyze business models' environmental impact, which incorporates trade-offs between economic value and environmental costs and shows that all models may create win-win situations for the manufacturer and the environment. Supplemental Material: The computer code and data that support the findings of this study and the online appendix are available within this article's supplemental material at https://doi.org/10.1287/opre.2023.0656. [ABSTRACT FROM AUTHOR]

Social media has transformed the marketing landscape, providing a platform for businesses to engage with consumers in dynamic and interactive ways. This study examines the influence of social media marketing on consumer buying behaviour, particularly in the durable goods sector in Odisha. It explores how factors such as brand visibility, customer reviews, influencer marketing, and targeted advertisements impact consumer decisions. Using a combination of surveys and interviews, the study collected data from various consumers across various demographic groups. The findings reveal that social media significantly influences brand perception, trust, and purchase intention, especially among younger consumers. Furthermore, platforms like Facebook, Instagram, and YouTube have emerged as critical channels where consumers seek product information before making durable goods purchases. This research contributes to the growing body of literature on digital marketing and provides insights for businesses aiming to enhance their social media strategies to attract and retain customers in the durable goods market. In the contemporary digital age, social media has emerged as a significant platform for marketing, influencing consumer choices, especially for durable goods. This study explores the impact of social media marketing on consumer buying behaviour in Odisha, focusing on how various social media channels like Facebook, Instagram, and YouTube shape consumers' purchasing decisions. Data were collected through surveys and interviews with a diverse demographic of consumers across Odisha. "The findings reveal that social media marketing not only enhances brand visibility but also plays a crucial role in trust-building and decision-making processes for durable goods purchases. This study provides insights for marketers aiming to optimiConsumer Behavioure their social media strategies to better engage and influence the modern consumer. [ABSTRACT FROM AUTHOR]

This paper investigates the sensitivities of Singapore’s sectoral industrial production to local and global business cycle variations using the auto-regressive distributed lag (ARDL) model in the nonlinear and asymmetric cointegration framework. By employing monthly time series data from Jan 1983 to Dec 2022 the study corroborates the commonly held view that durable industries are pro-cyclic to thelocal business cycle. However, the nature of cyclic sensitivity is different if viewed from a global perspective. Industries including pharmaceutical, computer, and motor vehicles industries flourish in both the local and global business cycle booms. Almost all industries having long-run linkages with global industrial production are also affected by global production growth in the short run. However, consistent with earlier studies for Southeast Asian countries, very few industries exhibit short-run asymmetries in their relationship with local and global business cycles. We found that incorporating long-run information also improves the forecasting ability of sectoral industrial production growth in Singapore.

We exploit the introduction of interstate banking deregulation across the U.S. to study the relationship between credit constraints and consumption of durables and energy use. Using the American Housing Survey, we link the timing of these reforms with evidence of a credit expansion and household responses on many margins. We find evidence that low-income households are more likely to purchase new appliances after the deregulation; however, this did not increase energy consumption. The results are informative for policymakers who would like households to purchase new durable goods that use less energy. [ABSTRACT FROM AUTHOR]

Purpose – The objective of the study is to identify both reasons for ignoring and for paying attention to the country of origin (COO) by consumers when choosing brands of durable goods. Design/methodology/approach – In this paper a qualitative approach was applied, i.e. 25 in-depth semistructured interviews with Polish consumers of durable goods purposively selected out of those who had previously participated in a quantitative survey conducted by the authors. Findings – Among the reasons for paying attention to the COO when choosing brands of durable goods, cognitive (rational), affective (emotional) and normative factors have been identified, while among the reasons for ignoring the COO by consumers, the authors identified only cognitive (rational) and affective (emotional) factors. Research limitations/implications – The conclusions can be applied by brand managers, e.g. when making decisions whether and why to communicate COO dimensions. Originality/value – This paper contributes to the international marketing literature as it develops a deeper insight into consumer behavior with reference to the consumers’ reasons for paying attention to and ignoring the COO, with very little published on the latter in particular. Furthermore, it is one of still relatively few qualitative studies conducted so far on COO taking a perspective of a consumer, especially the one from an emerging market from the European Union (EU).

This paper is concerned with the adoption and disadoption of electric vehicles (EVs) by its innovators. Based on existing literature on product adoption and disadoption by consumers, it considers both general (e.g., relative advantage, compatibility, complexity, and observability) and context-specific (environmental, performance/functional, and financial) motives for EV adoption. Furthermore, it also considers post-adoption satisfaction with the aforementioned context-specific constructs. Results suggest that, while environmental factors are the most important drivers of EV adoption for all adopters, they are poor predictors of subsequent disadoption. Rather, attitudes towards performance/functional and financial attributes of EVs at the time of adoption, as well as satisfaction with these constructs post-adoption, do a better job of discriminating between continuers and disadopters. Thus, the main drivers of EV adoption are different from those of EV disadoption. This paper also finds that general and context-specific reasons for EV adoption are effective predictors of subsequent disadoption. Furthermore, it shows that innovators are a diverse group of individuals, some of whom discontinue using the innovation early in its diffusion process. Implications of these results, both academic and practical, are discussed. [ABSTRACT FROM AUTHOR]

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There has been extensive research on the strategic choice between supply chain centralization and decentralization. However, most research assumes complete centralization or complete decentralization but omits the commonly adopted supply chain structure of partial centralization. With partial centralization, a firm owns a portion, but not all, of its partner. To help fill this research gap, in this paper, we make a major contribution by explicitly analyzing partial centralization in a supply chain where a durable‐good manufacturer owns a portion of its downstream retailer. We start with a two‐period model and derive analytical equilibrium outcomes of the supply chain and its members under complete centralization, complete decentralization, and partial centralization. First, our analysis reveals that partial centralization with an appropriate portion of ownership can yield the desirable product sales pattern over periods and alleviate the time‐inconsistency problem in selling durable goods. As a result, partial centralization can become the equilibrium structure for a durable‐good supply chain. Second, the manufacturer's optimal ownership level in the retailer decreases in the product durability and decision horizon length, implying that complete decentralization is more likely to be the supply chain structure in equilibrium for higher product durability and longer decision horizon. Third, our extended analyses demonstrate the robustness of the main results with backward partial centralization. Moreover, partial centralization outperforms conventional strategies such as two‐part tariffs that can coordinate a supply chain but not fully solve the time‐inconsistency problem associated with durable goods. [ABSTRACT FROM AUTHOR]

The shock of oil revenues, through changes in household expectations, leads to different effects on consumer spending in the durable and non-durable goods sector. Accordingly, the purpose of this article was to investigate the impact of oil revenues on private consumption expenditures of durable and non-durable goods in Iran. To test this relationship, two linear and nonlinear models in the period 1978-2020 were used. The model used in this study was of ARDL and NARDL methods. The results obtained in the estimated linear model showed that the intensity of the effect of disposable income on the consumption expenditure of durable and non-durable goods was equal to 0.61 and 0.68, respectively. Also, the effect of oil revenues on consumption expenditures of durable and non-durable goods in the nonlinear model was equal to 0.68 and 0.53, respectively. Moreover, the results obtained from the analysis of positive and negative shocks showed that the effect of positive shock of oil revenues on the consumption of durable and non-durable goods is 0.47 and 0.21, respectively, and the effect of negative shock of oil revenues on the consumption of goods Durable and non-durable were -0.35 and -0.14, in turn.

Consumers around the world have moved dramatically toward online platforms. Purchasing goods and services from independent suppliers through digital platforms has become a routine part of daily life. Recently, the COVID-19 pandemic has accelerated the paradigm shift toward digital economy and servitization. Data show that ecommerce sales have grown by $32 billion during the last two years (https://www.digitalcommerce360.com/article/coronavirus-impact-online-retail/). A large part of this ecommerce is on platforms-based models, where management of the platform community remains a difficult problem. One such question often discussed in the platforms context remains: Does acquiring a marquee seller help the platform owner? If so, how exactly? We show that in the specific context of B2B platforms, the impact of a marquee seller's presence is significantly positive on prices obtained by other sellers on the platform. This is because the marquee seller generates higher prices, given its brand, and these prices become reference prices for other sellers. The managerial implications highlight the importance of acquiring marquee sellers and encourage platform owners to understand the associated price effects. Our paper suggests that platform owners should consider and target sellers with marquee brand names, as they can result in a sugar-rush for prices of other sellers on the platform. Although digital platforms have become mainstream, there still remain some unanswered questions pertaining to managing platform ecosystems. One such unexplored question pertains to the effect of marquee sellers on the platform—marquee sellers arguably attract other sellers and buyers to the platform, thereby enhancing the platform's value. In this paper, we study how adding a marquee seller to a business-to-business (B2B) secondary-market platform for IT products affects other sellers, in terms of the prices they obtain for comparable products. Using proprietary data on B2B secondary-market auctions obtained from a platform provider, we show that the entry of a marquee seller has a positive effect on the prices obtained by other sellers on the platform, reflecting a reference-price effect. We further show that this positive effect on final prices is moderated by the extent to which bidders are active on multiple seller sites on the same platform and the extent to which bidders participate in the marquee seller site. We explain these effects using theory in multihoming and involvement, in terms of how reference prices are set. Our work extends the platforms literature by considering the specific influence of a marquee seller on other sellers, thereby informing platform owners on the implications of the advice to add more marquee sellers to platforms. We also contribute to the literature on secondary markets for durable, used IT products, which are instrumental in reducing electronic waste and mitigating the environmental damage done by electronic products in landfills. History: Raghu Santanam, Senior Editor; Pallab Sanyal, Associate Editor. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.1137. [ABSTRACT FROM AUTHOR]

Problem definition: In this work, we examine how ridesharing platforms affect changes in short-term vehicle purchasing. On the one hand, if the introduction of such platforms motivates owners to use the idle capacity of their existing vehicles to accrue rents, vehicle sales might fall. On the other hand, if the platform induces would-be drivers to purchase new vehicles in order to participate, vehicle sales might rise. Academic/practical relevance: Whereas operations management researchers have begun to broach this subject analytically, this work provides empirical evidence of the impact of ridesharing platforms on new vehicle ownership. Further, we assess heterogeneity in the effect across vehicle type and location. Methodology: We examine this tension using a unique data set of new vehicle registrations in China. In doing so, we exploit the variation in the timing of Uber entry using a difference-in-difference approach. Results: Findings suggest Uber entry is associated with a significant short-term increase in private new vehicle ownership, indicating that consumers actively change their stock of held resources to capture excess rents offered by the platform. These effects exclusively manifest among vehicle brands that qualify for the platform. Further, inasmuch as sales of vehicles with smaller displacement increase more than large-displacement vehicles, results indicate that the effect of Uber entry varies considerably across vehicle types. Finally, results indicate that the effects are stronger in locations where established public transportation options are weaker. Managerial implications: Results provide initial evidence that manufacturers can benefit from the emergence of the sharing economy, especially manufacturers whose products align with the needs of platform participants. For policy makers, our findings further undercut claims made by platforms that the individuals working on them are exploiting already existing resources, suggesting some form of nascent professionalism on the part of platform workers. Funding: The research was supported by the Key Program of National Natural Science of China [Grant 71832010]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2022.1183. [ABSTRACT FROM AUTHOR]

In the contemporary view, social media stands as a formidable force, facilitating rapid dissemination of information and serving as a prominent platform for advertising. Businesses adeptly leverage social media's advanced management information systems to tailor advertisements to match the preferences and behaviors of their target audience, thereby enhancing sales performance. Notably, social media's influence transcends generational boundaries, captivating younger demographics who integrate it seamlessly into their daily lives. This demographic's habitual engagement with shared content amplifies its impact, fueled by ubiquitous smart mobile phones and internet connectivity. The evolution of social media has prompted corporate entities to devise innovative marketing strategies across various sectors, anchored in Web 2.0 principles that foster virtual communities. Central to this ecosystem is social media advertising, which optimizes outreach through targeted delivery to users across platforms. By facilitating costeffective promotion, social media advertising promotes financial inclusion among businesses, driving sales and extending market reach. [ABSTRACT FROM AUTHOR]

The "right-to-repair" (RTR) movement calls for government legislation that requires manufacturers to provide repair information, tools, and parts so that consumers can independently repair their own products with more ease. The initiative has gained global traction in recent years. Repair advocates argue that such legislation would break manufacturers' monopoly on the repair market and benefit consumers. They further contend that it would reduce the environmental impact by reducing e-waste and new production. Yet the RTR legislation may also trigger a price response in the product market as manufacturers try to mitigate the profit loss. This paper employs an analytical model to study the pricing, welfare, and environmental implications of RTR. We find that, as the RTR legislation continually lowers the independent repair cost, manufacturers may initially cut the new product price and then raise it. This nonmonotone price adjustment may further induce a nonmonotone change in consumer surplus, social welfare, and the environmental impact. Strikingly, the RTR legislation can potentially lead to a lose–lose–lose outcome that compromises manufacturer profit, reduces consumer surplus, and increases the environmental impact despite repair being made easier and more affordable. This paper was accepted by Charles Corbett, operations management. Funding: Chen Jin gratefully acknowledges the Singapore Ministry of Education Academic Research Fund [Tier 1, Grant R-253-000-144-133]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2022.4401. [ABSTRACT FROM AUTHOR]

How should central banks optimally aggregate sectoral inflation rates in the presence of imperfect labor mobility across sectors? We study this issue in a two-sector New-Keynesian model and show that a lower degree of sectoral labor mobility, ceteris paribus , increases the optimal weight on inflation in a sector that would otherwise receive a lower weight. We analytically and numerically find that, with limited labor mobility, adjustment to asymmetric shocks cannot fully occur through the reallocation of labor, thus putting more pressure on wages, causing inefficient movements in relative prices, and creating scope for central bank' s intervention. These findings challenge standard central banks' practice of computing sectoral inflation weights based solely on sector size and unveil a significant role for the degree of sectoral labor mobility to play in the optimal computation. In an extended estimated model of the US economy, featuring customary frictions and shocks, the estimated inflation weights imply a decrease in welfare up to 10% relative to the case of optimal weights. [ABSTRACT FROM AUTHOR]

An empirical study of a firm's intertemporal product versioning and upgrade pricing decisions in the software industry. In many durable good contexts, firms price-discriminate by charging higher prices for the latest functionality. By contrast, the software market sees little such price discrimination despite new versions being introduced over time. I propose that the software firm's ability to price-discriminate is restricted by (1) the extent to which consumers value the innovation and (2) the cost associated with legacy software maintenance. To analyze this question, I use a unique data set of subscriptions to a Fortune 500 firm's software products. In my data, consumers frequently choose to forgo the free upgrade, electing to renew legacy versions of the product instead. To distinguish among the different factors driving this pattern, I develop a dynamic model of consumer choice of product versions, renewal opportunities, and upgrades. The model estimates reveal that, although the majority of consumers value new versions, the high-value, price-insensitive consumers do not, causing it to be unprofitable for the firm to price the latest functionality at a premium. Even so, I find that this preference heterogeneity favors a shift to a product with automatic upgrades to the latest functionality, thus providing both a cost and a demand justification for this observed industry trend. History: K. Sudhir served as the senior editor for this article. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mksc.2022.1389. [ABSTRACT FROM AUTHOR]