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on Contract Theory and Applications |
| By: | Navid Mojir (Yale School of Management); K. Sudhir (Cowles Foundation and Yale School of Management) |
| Abstract: | The paper develops the ï¬ rst structural model of organizational buying to study innovation diffusion in a B2B market. Our model is particularly applicable for routinized exchange relationships, whereby centralized buyers periodically evaluate and choose contracts, then downstream users or- der items on contracted terms. The model captures different utility tradeoffs for users and buyers while accounting for how buyer and user choices interact to impact user adoption/usage and buyer contracting. Further, the paper considers the dynamics induced by share of wallet (SOW) pricing contracts, commonly used in B2B markets to reward customer loyalty with discounts for buying more than a threshold share from a supplier. We assemble novel panel data on surgeon usage, SOW contracts, contract switching, and hospital characteristics. We ï¬ nd two segments of hospitals in terms of the relative power of surgeons and buyers: a buyer-centric and a surgeon-centric segment. Further, innovations diffuse faster in teaching hospitals and when surgeries are concentrated among a few surgeons. Finally, we answer such questions as: Should the marketer focus on push (buyer-focused) or pull (user-focused) strategies? Do SOW contracts hurt the innovations of smaller ï¬ rms? Surprisingly, we ï¬ nd that the contracts can help speed the diffusion of major innovations from smaller players. |
| Keywords: | Organizational Buying Behavior, healthcare marketing, B2B Markets, B2B Innovation, New Product Diffusion, New Product Adoption |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2315&r= |
| By: | Mr. Davide Malacrino; Luigi Pistaferri |
| Abstract: | This paper summarizes statistics on the key aspects of the distribution of earnings levels and earnings changes using administrative (social security) data from Italy between 1985 and 2016. During the time covered by our data, earnings inequality and earnings volatility increased, while earnings mobility did not change significantly. We connect these trends with some salient facts about the Italian labor market, in particular the labor market reforms of the 1990s and 2000s which induced a substantial rise in fixedterm and part-time employment. The rise in parttime work explains much of the rise in earnings inequality, while the rise in fixed-term contracts explains much of the rise in volatility. Both these trends affect the earnings distribution through hours worked: part-time jobs reduce hours worked within a week, while fixed-term contracts reduce the number of weeks worked during the year as well as increase their volatility. We find weak evidence that fixed-term contracts represent a "stepping-stone" to permanent employment. Finally, we offer suggestive evidence that the labor market reforms contributed to the slowdown in labor productivity in Italy by delaying human capital accumulation (in the form of general and firm-specific experience) of recent cohorts. |
| Keywords: | earnings mobility; earnings inequality; earnings distribution; labor market market trend; earnings change; Wages; Labor markets; Human capital; Income inequality; Income; Europe; Global |
| Date: | 2021–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/142&r= |
| By: | Johannes Boehm (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEP - LSE - Centre for Economic Performance - LSE - London School of Economics and Political Science); Ezra Oberfield (Princeton University) |
| Abstract: | The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distorted in states with weaker enforcement. Specifically, we document that in industries that tend to rely more heavily on relationship-specific intermediate inputs, plants in states with more-congested courts shift their expenditures away from intermediate inputs and have a greater vertical span of production. To quantify the effect of these distortions on aggregate productivity, we construct a model in which plants have several ways of producing, each with different bundles of inputs. Weak enforcement exacerbates a holdup problem that arises when using inputs that require customization, distorting both the intensive and extensive margins of input use. The equilibrium organization of production and the network structure of input-output linkages arise endogenously from the producers' simultaneous cost-minimization decisions. We identify the structural parameters that govern enforcement frictions from cross-state variation in the first moments of producers' cost shares. A set of counterfactuals show that enforcement frictions lower aggregate productivity to an extent that is relevant on the macro scale. |
| Keywords: | Production networks,Intermediate inputs,Misallocation,Productivity,Contract enforcement,Value chains |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03391855&r= |
| By: | Bigoni, Maria (University of Bologna); Ploner, Matteo (University of Trento); Vu, Thi-Thanh-Tam (University of Trento) |
| Abstract: | The impact of workers' non-pecuniary motivation on their productivity is a fundamental issue in labor economics. Previous studies indicate that prosocially motivated workers may perform better when assigned to jobs having socially desirable implications – even if effort is non contractible and they are offered a low-powered fixed-compensation scheme – as compared to a standard job with an effort-contingent payment. This suggests that profit maximizing employers should assign workers to different jobs, based on workers' prosociality. We run an experiment to explore the link between workers' prosociality and their level of effort under a prosocial and a standard job, and show that employers actually exploit the information on workers' prosociality to assign them the type of job that would be most profitable from the firm's perspective. |
| Keywords: | dictator game, incentives, laboratory experiment, principal-agent game, real-effort task |
| JEL: | C91 D63 D64 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14779&r= |
| By: | Daniela Di Cagno (LUISS University); Lorenzo Ferrari (LUISS University); Werner Güth (‡Max Planck Institute for Collective Goods and LUISS University); Vittorio Larocca (LUISS University) |
| Abstract: | Ad-hoc contracting allows to quickly react to changes which could be neglected or noticed too late in case of constant contracting. But always deciding anew, e.g., how much and what to order in commercial and what to buy in private life, is too cumbersome. To capture the cognitive burden of ad-hoc contracting and how it can be avoided by constant contracting, our setup confronts ad-hoc pricing, which is non-revealing, with constantly revealing pricing. The experiment modifies the Acquiring-a-Company game by reversing the responsibility for pricing to the seller who proposes a price together with a cheap-talk value message in case of ad-hoc pricing and, in case of constantly revealing contracting the seller demands a constant surplus share for all periodic interactions. The experiment lets sellers decide between constantly revealing prices and ad-hoc non-revealing prices. Buyers, either aware of the seller’s surplus share or only of the periodic value message and price, can accept or reject trade in each of several successive periods played by the same pair, a seller and a buyer participant. Will sellers opt for constant pricing already without experience or ad-hoc pricing? And will one, when more experienced, opt for what has been more profitable? |
| Keywords: | Bargaining, Experiment, Complete and Incomplete Information |
| JEL: | C73 C92 D82 D90 |
| Date: | 2021–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:523&r= |