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The effects of subsidies on increasing consumption through for-profit and not-for-profit newsvendors

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dc.affiliation.dptoUC3M. Departamento de Economía de la Empresaes
dc.contributor.authorBerenguer Falguera, Gemma
dc.contributor.authorFeng, Qi
dc.contributor.authorShanthikumar, George
dc.contributor.authorXu, Lei
dc.date.accessioned2022-06-21T17:21:46Z
dc.date.available2022-06-21T17:21:46Z
dc.date.issued2017-06-27
dc.description.abstractSubsidy programs are widely offered in both developing and developed countries to encourage consumption of products that generate positive social, health, and environmental externalities. We study the effect of subsidies on product consumption under uncertain market demand. To reach a target consumer population, the program sponsor may subsidize a for-profit or a not-for-profit firm on each unit of the product purchased by the firm or on each unit of the sale generated by the firm. We show that subsidy programs provide stronger incentives to a not-for-profit firm than to its for-profit counterpart in inducing a large consumption whenever the sponsor is having a very limited budget or a very generous budget. When subsidizing a not-for-profit firm, the sponsor should always choose the purchase subsidy over the sales subsidy because the former can induce a larger consumption than the latter with the same subsidy spending. However, this is not always true when the subsidy program is administered through a for-profit firm, unless the firm is a price taker in the market or the sponsor has a limited budget. Our analysis leads to new theoretical development of price-setting newsvendor problem for both the for-profit and not-for-profit operations under subsidy.en
dc.description.sponsorshipNational Natural Science Foundation of China. Grant Numbers: 71471107, 71431004es
dc.identifier.bibliographicCitationBerenguer, G., Feng, Q., Shanthikumar, J. G., & Xu, L. (2016). The Effects of Subsidies on Increasing Consumption through For-Profit and Not-For-Profit Newsvendors. Production and Operations Management, 26 (6), pp. 1191-1206.es
dc.identifier.doihttps://doi.org/10.1111/poms.12632
dc.identifier.issn1059-1478
dc.identifier.publicationfirstpage1191es
dc.identifier.publicationissue6es
dc.identifier.publicationlastpage1206es
dc.identifier.publicationtitlePRODUCTION AND OPERATIONS MANAGEMENTen
dc.identifier.publicationvolume26es
dc.identifier.urihttps://hdl.handle.net/10016/35214
dc.identifier.uxxiAR/0000029235
dc.language.isoenges
dc.publisherWileyes
dc.rights© 2016 Production and Operations Management Societyes
dc.rights.accessRightsopen accessen
dc.subject.ecienciaEconomíaes
dc.subject.ecienciaEmpresaes
dc.subject.otherNewsvendor modelen
dc.subject.otherPricingen
dc.subject.otherNot-for-profit operationsen
dc.subject.otherSubsidyen
dc.titleThe effects of subsidies on increasing consumption through for-profit and not-for-profit newsvendorsen
dc.typeresearch article*
dc.type.hasVersionAM*
dspace.entity.typePublication
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