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1.
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Nelson F. Granados
University of Minnesota - Twin Cities - Carlson School of Management Alok Gupta
University of Minnesota - Twin Cities - Carlson School of Management Robert Kauffman
University of Minnesota - Twin Cities - Carlson School of Management
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27 Feb 06
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Last Revised:
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25 Jul 07
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93
(83,158)
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Abstract:
The Internet has transformed the nature of business-to-consumer transaction-making practices in many industries. Sellers now attract customers with innovative Internet-based selling mechanisms that can reveal or conceal market information. We define market transparency as a design dimension for Internet-based selling that involves firm choices about the level of availability and accessibility of information about products and prices. Firms can influence market transparency either by designing and implementing their own Internet-based selling mechanism, or by offering their products through an existing electronic market. We develop an economic model of a monopolist that price discriminates across distribution channels based on their market transparency levels. The model provides normative guidelines for firms to set transparency levels and prices across distribution channels in order to maximize profits. We empirically evaluate airline pricing and market transparency to show the applicability of these guidelines. The evidence suggests that relative prices and transparency levels across the Internet and traditional air travel channels are sub-optimal.
Air travel industry, Internet-based selling, market transparency, mechanism design, pricing
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2.
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Kunsoo Han
University of Minnesota - Twin Cities - Carlson School of Management Robert Kauffman
University of Minnesota - Twin Cities - Carlson School of Management Barrie R. Nault
University of Calgary - Haskayne School of Business
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| Posted: |
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13 Jul 06
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Last Revised:
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13 Jul 06
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76
(95,025)
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Abstract:
With the rapid growth of business-to-business electronic commerce and the increasing need for supply chain collaboration, systems that support supply procurement are becoming ever more important. Due to the substantial costs of hardware, software and effort needed for implementation success, firms that participate in developing e-procurement systems want to reap as much value as possible. We use the theory of incomplete contracts to understand the different ways to organize the ownership of IT assets in procurement systems across two or more firms. The purpose is to maximize the value that the participants can appropriate and give them the proper incentives to invest. Based on the theory, we investigate the primary determinants of optimal ownership for e-procurement systems, focusing on the relative importance of participants' investments, which is a measure of the marginal value that each participant adds to any proposed ownership structure for the IT assets. We also provide a framework for analyzing e-procurement system ownership structures. We apply our approach to vendor managed inventory systems, as an illustration of the range of e-procurement systems ownership settings that we can treat with this theoretical perspective.
Economic theory, e-procurement systems, incomplete contracts, IT investments, interorganizational IS, ownership, systems implementation, supply chain management, vendor managed inventory.
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