The Optimal Strategy of China’s Plastic Drinking Straws Ban Based on Consumer Heterogeneity and Retailer Competition

The Chinese government has issued a new “Plastic Restriction Ban” requiring that, by the end of 2020, the food and beverage industry across the country bans the use of single-use, nondegradable plastic drinking straws. The governance of plastic drinking straws is a multi-dimensional and complex process. Therefore, based on the heterogeneity of consumers, this paper constructs a tripartite game model (the government, retailers, and consumers) for the governance of plastic drinking straws in China. Under this model, this research derives an optimal strategy in both monopoly and competitive markets, assuming the government has access to two policy tools, fines and subsidies. The research results suggest the following. (1) In monopoly markets, when (a) the fine or subsidy fee is high or (b) the fine or subsidy fee is low and the number of environment-conscious consumers is high, retailers are more inclined to provide biodegradable drinking straws. (2) Consumer heterogeneity has a certain impact on policy results; when there are enough environment-conscious consumers, policy costs can be reduced. (3) For high-quality products, the policy costs in competitive markets is lower than in monopoly markets; for low-quality products, the policy costs in competitive markets is higher than in monopoly markets. Based on the conclusions, this work suggests the government should focus on cultivating consumers’ environmental awareness and tighter control of products quality, in addition to the two policy tools, i.e., fines and subsidies, because these can reduce policy costs. Consumers should be aware of their own importance to China’s Plastic Drinking Straws Ban and adopt a refusal to accept plastic drinking straws and reduce the consumption of disposable plastics to support the policy. Retailers should also realize that proactively catering to consumer and government expectations can bring higher benefits to themselves; this can be achieved by providing high-quality biodegradable straws to support China’s Plastic Drinking Straws Ban. The model of this work could be applied to other corporate activities related to sustainability, such as plastic bags, plastic bottles, etc., and their connection to government policies.

Show Me the Money: The Economic Impact of Membership-Based Free Shipping Programs on E-Tailers

This research examines the economic impact of membership-based free-shipping (MFS) programs when introduced as an augmentation to widely accepted contingent free-shipping (CFS) policies. Under CFS, consumers waive the shipping surcharge if the order exceeds a certain threshold, whereas under MFS, consumers pay an upfront fee and enjoy the free-shipping perk throughout the membership period. We develop a stylized model that considers consumer heterogeneity in two dimensions: (1) disutility from acquiring an auxiliary product—a product that consumers would not otherwise purchase—to qualify for CFS; and (2) shopping frequency over a given period. Our analysis suggests that the introduction of MFS allows the e-tailer to segment the market further, which could lead to a higher product price. When the disutility from acquiring an auxiliary product is moderate, the e-tailer should charge a high membership fee to target only frequent shoppers who forgo CFS. However, the e-tailer should lower the fee to lure also (1) frequent shoppers who would otherwise take CFS, when the disutility is high; or (2) infrequent shoppers who would otherwise forgo CFS, when the disutility is low. In all cases, although the collected fee revenue can never compensate for the cost arising from offering the free-shipping perk, the loss can be recouped as a desirable outcome of a more segmented market. Our research generates insights into the optimal design of e-tailers’ shipping policies, shedding light on the practical challenges that confront e-tailers.

Nonlinear Dynamic Analysis of New Product Diffusion considering Consumer Heterogeneity

When a new product enters the market, individual consumers’ decision-making behavior and purchase time are uncertain. Based on the dynamics of epidemic transmission theory and agent modeling technology, this study proposes a new coupling model through the combination of the improved SEIR epidemic model and the heterogeneous agent model. This model considers consumer heterogeneity resulting from three aspects in consumers’ sensitivity, network topology, and considerations of information flow received. It aims to analyze how consumer heterogeneity affects the scale and speed of new product diffusion. The proposed model showed that consumers’ characteristics and behavior combination at the microlevel lead to the diversity of nonlinear diffusion curves at the macrolevel for new products. Moreover, a pilot study is conducted to simulate this model and examine how to estimate the model’s parameters using aggregated data about film products. The pilot study results suggested that different consumer characteristics and behavior combinations affect the scale and speed of new product diffusion to varying degrees. In different scenarios, there were significant differences in the influence of the degree of consumer heterogeneity on diffusion, accompanied by the occurrence of threshold. The results of the empirical analysis in this study are in line with reality.