Impact of Network Structure on New Service Pricing

We analyze a firm’s optimal pricing of a new service when consumers interact in a network and impose positive externality on one another. The firm initially provides its service for free, leveraging network externality to promote rapid service consumption growth. The firm raises the price and starts earning revenue only when a sufficient level of consumer interactions is established. Incorporating the local network effects in a nonstationary dynamic model, we study the impact of network structure on the firm’s revenue and optimal pricing decision. We find that the firm delays the timing of service monetization when it faces a more strongly connected network despite the fact that such a network allows the firm to monetize the service sooner by resulting in faster consumption growth. We also find that the firm benefits from network imbalance; that is, the firm prefers a network of consumers with varying degrees of connections to that with similar degrees of connections. We also study the value of knowing the network structure and discuss how such knowledge impacts the firm’s profitability. Our analyses rely on the techniques from algebraic graph theory, which enable us to solve the firm’s high-dimensional dynamic pricing problem by relating it to the network’s spectral characteristics.

Selling Sustainability

This study aims to evaluate the qualities required for sustainable clothing brands to succeed in an industry dominated by "fast fashion," an environmentally unfriendly manufacturing and distribution process. A number of cross-industry case studies were conducted, focusing on companies with sustainability built into their business models from several verticals. Our analysis found that the main reason for these businesses’ commercial success was not the fact that they were sustainable, but that they brought an innovative and marketable product that helped consumers. Their sustainability was not a selling point; instead, their products' benefits were, and we believe that sustainable businesses fail to do so. By marketing "coolness," the health benefits, luxury appeal, and clothing quality of Whole Foods Market, Tesla, and Patagonia allowed these brands to build extremely successful businesses, with sustainability benefits tacked on as a very positive externality. Generalizing, we claim that a sustainable fashion brand must be inexpensive, marketable, innovative, and profitable to find success in the fashion industry. We concluded that fashion companies should use advanced technology such as blockchain technology and biomimicry to create sustainable products that are appealing to the masses, mirroring the case studies above by providing outsized environmental benefits.

Biological Control of Plant Diseases: An Evolutionary and Eco-Economic Consideration

Biological control is considered as a promising alternative to pesticide and plant resistance to manage plant diseases, but a better understanding of the interaction of its natural and societal functions is necessary for its endorsement. The introduction of biological control agents (BCAs) alters the interaction among plants, pathogens, and environments, leading to biological and physical cascades that influence pathogen fitness, plant health, and ecological function. These interrelationships generate a landscape of tradeoffs among natural and social functions of biological control, and a comprehensive evaluation of its benefits and costs across social and farmer perspectives is required to ensure the sustainable development and deployment of the approach. Consequently, there should be a shift of disease control philosophy from a single concept that only concerns crop productivity to a multifaceted concept concerning crop productivity, ecological function, social acceptability, and economical accessibility. To achieve these goals, attempts should make to develop “green” BCAs used dynamically and synthetically with other disease control approaches in an integrated disease management scheme, and evolutionary biologists should play an increasing role in formulating the strategies. Governments and the public should also play a role in the development and implementation of biological control strategies supporting positive externality.

FAKTOR SOSIAL EKONOMI DAN LINGKUNGAN PADA AGROWISATA MUNCAK TEROPONG LAUT DI DESA MUNCAK KABUPATEN PESAWARAN PROVINSI LAMPUNG

This research aims to determine factors that affect the frequency of tourists visits, economic impacts generated, and the positive and negative externality impacts to community surrounding of Muncak Teropong Laut Agrotourism area. Data collection was conducted from November 2018 to February 2019. Respondents were 80 visitors and 7 people from surrounding community. Factors affecting the frequency of visits were analyzed using multiple linear regression whereas economic impact analysis and externalities are explained by qualitative descriptive. The study shows that factors affecting the number of visits to Muncak Teropong Laut are age, education, income, travel expenses, time of visit, and facilities. Economic impact of the community surrounding Muncak Teropong Laut is increased in business activity such as small vendors that gain IDR750,000.00 to IDR1,000,000.00 per month. Other positive externality is absorption of labour. Negative externalities include cost of road repairs and medical expenses.Key words: agrotourism, community economics, externalities

Mitigating the externality of diseases of poverty through health aid

Externality exists in healthcare when an individual benefits from others being healthy as it reduces the probability of getting sick from illness. Healthy workers are considered to be the more productive labourers leading to a country’s positive economic growth over time. Several research studies have modelled disease transmission and its economic impact on a single country in isolation. We developed a two-country disease-economy model that explores disease transmission and cross-border infection of disease for its impacts. The model includes aspects of a worsening and rapid transmission of disease juxtaposed by positive impacts to the economy from tourism. We found that high friction affects the gross domestic product (GDP) of the lower-income country more than the higher-income country. Health aid from one country to another can substantially help grow the GDP of both countries due to the positive externality of disease reduction. Disease has less impact to both economies if the relative cost of treatment over an alternative (e.g. vaccination) is lower than the baseline value. Providing medical supplies to another country, adopting moderate friction between the countries, and finding treatments with lower costs result in the best scenario to preserve the GDP of both countries.

NP-Hardness and Approximation Algorithms for Iterative Pricing on Social Networks with Externalities

We study how a monopolist seller should price an indivisible product iteratively to the consumers who are connected by a known link-weighted directed social network. For two consumers [Formula: see text] and [Formula: see text], there is an arc directed from [Formula: see text] to [Formula: see text] if and only if [Formula: see text] is a fashion leader of [Formula: see text]. Assuming complete information about the network, the seller offers consumers a sequence of prices over time and the goal is to obtain the maximum revenue. We assume that the consumers buy the product as soon as the seller posts a price not greater than their valuations of the product. The product’s value for a consumer is determined by three factors: a fixed consumer specified intrinsic value and a variable positive (resp. negative) externality that is exerted from the consumer’s out(resp. in)-neighbours. The setting of positive externality is that the influence of fashion leaders on a consumer is the total weight of links from herself to her fashion leaders who have owned the product, and more fashion leaders of a consumer owning the product will increase the influence (external value) on the consumer. And the setting of negative externalities is that the product’s value of showing off for a consumer is the total weight of links from her followers who do not own the product to herself, and more followers of a consumer owning the product will decrease this external value for the consumer. We confirm that finding an optimal iterative pricing is NP-hard even for acyclic networks with maximum total degree [Formula: see text] and with all intrinsic values zero. We design a greedy algorithm which achieves [Formula: see text]-approximation for networks with all intrinsic values zero and show that the approximation ratio [Formula: see text] is tight. Complementary to the hardness result, we design a [Formula: see text]-approximation algorithm for Barabási–Albert networks.

Does official development assistance promote tourism demand for donor countries? Evidence from Switzerland

This study estimates the effect of official development assistance (ODA) on tourism demand of recipient countries for donor countries. We analyzed a panel dataset of 15 recipient countries of Switzerland’s aid from 2005 to 2017, for which data are available. We used both tourist arrivals at lodging establishments, particularly hotels, in Switzerland and hotel nights as proxies for recipient countries’ tourism demand in Switzerland. Using a modified gravity model of trade for empirical testing, we found that an increase of every US$1000 ODA to recipient countries would generate 3.6 tourist arrivals and almost four hotel nights in the following year, after controlling for the effects of GDP and population of recipient countries, the exchange rate and the distance between recipient countries and Switzerland, and trade facilitators. We conclude that ODA generates a positive externality on donor countries, namely, that recipient countries incline to increase their imports from donor countries, at least partially in the form of inbound tourism in donor countries.

The effects of taxes and subsidies on environmental qualities in a differentiated duopoly

In a horizontally differentiated duopoly, a green attribute (environmental quality) can be added to the products. Average green quality generates a positive externality entering the Government’s objective function (and possibly consumers’ utility). A tax on the “dirtiest” product decreases its environmental quality but it increases that of the cleaner rival enough to imply an average quality increase, achieving environmental protection. The same holds for a subsidy to production targeted to the cleanest producer. A generic quality-related subsidy also increases the positive externality, increases profits of the greenest and lowers those of the dirtiest producer. Education campaigns by the Government also increase average green quality.

ICT Use and Successful Learning: The Role of the Stock of Human Capital

Previous empirical studies have found a weak nexus between the use of information and communication technologies (ICT) for learning and students’ outcomes. However, this literature has not considered the role that the countries’ stock of human capital can have in the successful use of ICT for learning. In this paper, we test empirically the existence of complementarities between human capital and technology adoption for learning. We carry out an empirical analysis with PISA data from a large-scale sample of 363,412 students enrolled in 13,215 schools in 48 countries. We estimate a hierarchical linear model (HLM) of three levels: students, schools, and countries. Our results strongly support the evidence of a positive externality of the stock of human capital on ICT use for learning. When we consider the moderator-effect of the stock of human capital, we find that the negative outcome of ICT use on students’ outcomes in mathematics, reading and science turns positive (greater and more positive the higher the stocks of human capital are). The greater the stock of human capital an economy has, the more benefits it can get from investments in ICT for learning.

A Virtuous Circle of Governance Contests with Externalities

Governments create contests to allocate resources to stakeholders, e.g., grants, contracts. The actions of these stakeholders can generate a positive externality for themselves—the contest winner can attract additional outside funding and donations from third-parties who want to jump on the winner’s bandwagon. Herein we examine the externalities arising from these contests created by governance and their impact on a virtuous circle of governance contests. Among various conditions that make governance virtuous, we focus on the equilibrium expected payoffs of stakeholders, the difference in them, and the rent-dissipation rates. Our study shows that the impact of externalities on the efficiency of governance depends on two key factors: (i) the choice of governance contests, the player-externality and the winner-externality, and (ii) the relative efficiency of stakeholders’ efforts.