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Ruben Lobel

Bio: Ruben Lobel is an academic researcher from Airbnb. The author has contributed to research in topics: Subsidy & Dynamic pricing. The author has an hindex of 10, co-authored 18 publications receiving 966 citations. Previous affiliations of Ruben Lobel include Massachusetts Institute of Technology & University of Pennsylvania.

Papers
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Journal ArticleDOI
TL;DR: It is concluded that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity, and as labor becomes more expensive, providers and consumers are better off with surge pricing.
Abstract: Recent platforms, like Uber and Lyft, offer service to consumers via “self-scheduling” providers who decide for themselves how often to work. These platforms may charge consumers prices and pay providers wages that both adjust based on prevailing demand conditions. For example, Uber uses a “surge pricing” policy, which pays providers a fixed commission of its dynamic price. We find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage (or both) and although surge pricing is not optimal, it generally achieves nearly the optimal profit. Despite its merits for the platform, surge pricing has been criticized in the press and has garnered the attention of regulators due to concerns for the welfare of providers and consumers. However, we find that providers and consumers are generally better off with surge pricing because providers are better utilized and consumers benefit both from lower prices during normal demand and expanded access to service during peak demand. We conclude, in contrast to popular criticism, that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity.

382 citations

Journal ArticleDOI
TL;DR: In this article, the authors study several pricing schemes that could be implemented on a service platform, including surge pricing, and find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit.
Abstract: Recent platforms, like Uber and Lyft, offer service to consumers via "self-scheduling" providers who decide for themselves how often to work. These platforms may charge consumers prices and pay providers wages that both adjust based on prevailing demand conditions. For example, Uber uses a "surge pricing" policy, which pays providers a fixed commission of its dynamic price. With a stylized model that yields analytical and numerical results, we study several pricing schemes that could be implemented on a service platform, including surge pricing. We find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit. Despite its merits for the platform, surge pricing has been criticized because of concerns for the welfare of providers and consumers. In our model, as labor becomes more expensive, providers and consumers are better off with surge pricing because providers are better utilized and consumers benefit both from lower prices during normal demand and expanded access to service during peak demand. We conclude, in contrast to popular criticism, that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity. The e-companion is available at https://doi.org/10.1287/msom.2017.0618 .

372 citations

Journal ArticleDOI
TL;DR: In this article, the authors study the impact of government subsidies for green technology adoption on the manufacturing industry's response to demand uncertainty and show that an increase in demand uncertainty leads to higher production quantities and lower prices, resulting in lower profits for the supplier.
Abstract: This paper studies government subsidies for green technology adoption while considering the manufacturing industry’s response. Government subsidies offered directly to consumers impact the supplier’s production and pricing decisions. Our analysis expands the current understanding of the price-setting newsvendor model, incorporating the external influence from the government, who is now an additional player in the system. We quantify how demand uncertainty impacts the various players (government, industry, and consumers) when designing policies. We further show that, for convex demand functions, an increase in demand uncertainty leads to higher production quantities and lower prices, resulting in lower profits for the supplier. With this in mind, one could expect consumer surplus to increase with uncertainty. In fact, we show that this is not always the case and that the uncertainty impact on consumer surplus depends on the trade-off between lower prices and the possibility of underserving customers with h...

279 citations

Journal ArticleDOI
TL;DR: In this article, the authors studied the impact of government subsidies for green technology adoption while considering the manufacturing industry's response and showed that the decentralized decisions are also optimal for a central planner managing jointly the supplier and the government.
Abstract: This paper studies government subsidies for green technology adoption while considering the manufacturing industry's response. Government subsidies offered directly to consumers impact the supplier's production and pricing decisions. Our analysis expands the current understanding of the price-setting newsvendor model, incorporating the external influence from the government who is now an additional player in the system. We quantify how demand uncertainty impacts the various players (government, industry and consumers) when designing policies. We further show that for convex demand functions, an increase in demand uncertainty leads to higher production quantities and lower prices, resulting in lower profits for the supplier. With this in mind, one could expect consumer surplus to increase with uncertainty. In fact, we show this is not always the case and the uncertainty impact on consumer surplus depends on the trade-off between lower prices and the possibility of under-serving customers with high valuations. We also show that when policy makers such as governments ignore demand uncertainty when designing consumer subsidies, they can significantly miss the desired adoption target level. From a coordination perspective, we demonstrate that the decentralized decisions are also optimal for a central planner managing jointly the supplier and the government. As a result, subsidies provide a coordination mechanism.

137 citations

Journal ArticleDOI
TL;DR: In this paper, the authors develop a model for the adoption of solar photovoltaic technology by residential consumers and develop a framework for policy makers to find optimal subsidies in order to achieve a desired adoption target with minimum cost for the system.
Abstract: In this paper, we develop a model for the adoption of solar photovoltaic technology by residential consumers. In particular, we assume consumers purchase these solar panels according to a discrete choice model. The technology adoption process is reinforced by network externalities such as imitating customer behavior and cost improvements through learning-by-doing. Using this model, we develop a framework for policy makers to find optimal subsidies in order to achieve a desired adoption target with minimum cost for the system. We discuss the structure of the optimal subsidy policy and how the overall system cost changes with the adoption target. Furthermore, we validate the model through an empirical study of the German solar market, where we estimate the model parameters, generate adoption forecasts and demonstrate how to solve the policy design problem. We use this framework to show that the current policies in Germany are not efficient. In particular, our study suggests that their subsidies should be higher in the near future and the gradual phase-out of the subsidies should occur faster.

98 citations


Cited by
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Journal Article
TL;DR: This book is one of the most important contributions to scientific methodology of the authors' generation and the lessons the author has to teach are well epitomized.
Abstract: A clinician or a medical laboratory worker who turns over the 250 pages of Professor R. A. FISHER's new book' and discovers that more than 200 pages are devoted to the discussion of the yield of plots of land at Rothamsted Experimental Station will be apt to conclude that the wQrk is no, concern of his. If, having a few minutes to spare, he samples -a few pages and discovers that, although a most sparing use is made of mathematical symbols or formulae, the author's argument requires a strenuous effort of attention to follow, his conclusion may be strengthened. It is, however, quite wrong. The adjecti-ves \" great,\" \" masterly,\" and \" epoch-making \" may properly be abandoned to the Sunday reviewers of novels and poems, but it is safe to say that this book is one of the most important contributions to scientific methodology of our generation. The lessons the author has to teach are well epitomized in the following quotations. \" It is an essential condition of experimentation that the experimental material is known to be variable, but it is not known, in respect of any individual, in what direction his response to a given treatment will vary from the average. No direct allowance for this variability can, therefore, be made. The knowledge. which guides us in increasing the precision of an experiment is not a knowledge of the individual peculiarities of particular experimental units, such as plots ofland, experimental animals,coco-nut palms, or hospital patients, but a knowledge that there is less variation within certain aggregates of these than there is among different individuals belonging to different aggregates.\" (Page 78.) \" We are usually ignorant which, out of innumerable possible factors, may prove ultimately to be the most important, though we may have strong presuppositions that some few of them are particularly worthy of study. We have usually no knowledge that any one factor will exert its effect independently of all others that can be varied, or that its effects are particularly simply related to variations in these other factors. On the contrary, if single factors are chosen for investigation, it is not because we anticipate that the laws of nature can be expressed with any particular simplicity in terms of these variables, but because they are variables which can be controlled or measured with comparative ease. If the investigator, in these circumstances, confines his attention to any single factor, we may infer either that he is the unfortunate victim of a doctrinaire theory as to how experimentation should proceed, or that the time, material, or equipment at his disposal are too limited to allow him to give attention to more than one narrow aspect of his problem.\" (Page 97.) \"We may, by deliberately varying in each case some of the conditions of the experiment, achieve a wider inductive basis for our conclusions, witlout in any degree impairing their precision.\" (Page 107.)

478 citations

Journal ArticleDOI
TL;DR: In this article, the authors study several pricing schemes that could be implemented on a service platform, including surge pricing, and find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit.
Abstract: Recent platforms, like Uber and Lyft, offer service to consumers via "self-scheduling" providers who decide for themselves how often to work. These platforms may charge consumers prices and pay providers wages that both adjust based on prevailing demand conditions. For example, Uber uses a "surge pricing" policy, which pays providers a fixed commission of its dynamic price. With a stylized model that yields analytical and numerical results, we study several pricing schemes that could be implemented on a service platform, including surge pricing. We find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit. Despite its merits for the platform, surge pricing has been criticized because of concerns for the welfare of providers and consumers. In our model, as labor becomes more expensive, providers and consumers are better off with surge pricing because providers are better utilized and consumers benefit both from lower prices during normal demand and expanded access to service during peak demand. We conclude, in contrast to popular criticism, that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity. The e-companion is available at https://doi.org/10.1287/msom.2017.0618 .

372 citations

Journal ArticleDOI
TL;DR: This work considers an on-demand service platform using earning-sensitive independent providers with heterogeneous reservation price (for work participation) to serve its time and price-sensitive customers.
Abstract: We consider an on-demand service platform using earning-sensitive independent providers with heterogeneous reservation price (for work participation) to serve its time and price-sensitive customers...

328 citations

Journal ArticleDOI
TL;DR: In this paper, a general framework to describe ridesourcing systems is proposed, which can aid understanding of the interactions between endogenous and exogenous variables, their changes in response to platforms' operational strategies and decisions, multiple system objectives, and market equilibria in a dynamic manner.
Abstract: With the rapid development and popularization of mobile and wireless communication technologies, ridesourcing companies have been able to leverage internet-based platforms to operate e-hailing services in many cities around the world. These companies connect passengers and drivers in real time and are disruptively changing the transportation industry. As pioneers in a general sharing economy context, ridesourcing shared transportation platforms consist of a typical two-sided market. On the demand side, passengers are sensitive to the price and quality of the service. On the supply side, drivers, as freelancers, make working decisions flexibly based on their income from the platform and many other factors. Diverse variables and factors in the system are strongly endogenous and interactively dependent. How to design and operate ridesourcing systems is vital—and challenging—for all stakeholders: passengers/users, drivers/service providers, platforms, policy makers, and the general public. In this paper, we propose a general framework to describe ridesourcing systems. This framework can aid understanding of the interactions between endogenous and exogenous variables, their changes in response to platforms’ operational strategies and decisions, multiple system objectives, and market equilibria in a dynamic manner. Under the proposed general framework, we summarize important research problems and the corresponding methodologies that have been and are being developed and implemented to address these problems. We conduct a comprehensive review of the literature on these problems in different areas from diverse perspectives, including (1) demand and pricing, (2) supply and incentives, (3) platform operations, and (4) competition, impacts, and regulations. The proposed framework and the review also suggest many avenues requiring future research.

303 citations