MIS Distinguished Speaker Series

Is Free Shipping Really Free? Strategic Implications of Membership-Based Free Shipping Programs of Online Marketplaces

Huseyin Cavusoglu

Professor of Information Systems

Naveen Jindal School of Management, University of Texas at Dallas

Friday, April 20, 2018

10:30 AM – noon

Speakman Hall Suite 200

Abstract

We examine the membership-based free shipping (MFS) program offered by some online marketplaces in which a retail platform bears the shipping costs for purchases made by members that have paid an upfront fee, but non-members bear the shipping costs themselves. We show that the membership fee collected by the platform from members does not cover the cost of shipping products to members for their purchases during the membership period. While it may appear from this finding that the MFS program benefits members and hurts the platform, we show the MFS program actually benefits the platform when the shipping cost is less than a threshold value, which is increasing in the commission rate the platform earns from the third-party sellers. However, the gain from the MFS program is not necessarily decreasing in the shipping cost either. The MFS program always hurts non-members; it may also hurt even members. The demand enhancement, price increasing, and negative externality effects of the MFS program explain the results. Our findings imply that judging the success of the MFS program to either the platform or members solely based on the membership fee and shipping cost is misleading and that the MFS program is most attractive to the platform when the shipping cost is neither too low nor too high. Finally, the society can be worse off under the MFS program because the MFS program may stimulate demand from some low valuation and high misfit cost members who would not make a purchase in the absence of the MFS program, but the surplus enjoyed by these members is offset by the shipping cost borne by the platform.

Measuring Relative Performance of Accountable Care Organizations: The Role of Health Information Technology

Indranil Bardhan

Professor of Management Information Systems

Jindal School of Management, The University of Texas at Dallas

Friday, September 15, 2017

10:30 AM – 12:00 PM

Speakman Hall Suite 200

Abstract

We propose and test a new framework to study the performance of Accountable Care Organizations (ACOs), a new type of healthcare delivery organization which was established by CMS. We develop a novel conceptualization of ACO performance, based on their ability to use health care resources to maximize patient health outcomes. Our approach draws on data envelopment analysis (DEA) to estimate the relative efficiency of ACOs. We address two research questions: (a) what is the impact of ACO size on performance, and (b) does health IT moderate the impact of size on ACO performance? We test our models using a nationwide sample of ACO data, using a two-stage DEA and regression approach. We find that larger ACOs are likely to exhibit lower performance relative to smaller ACOs. We also find that usage of electronic health records mitigates the negative impact of ACO size on performance. Our results suggest a closer look at the impact of health IT to improve patient care coordination and quality outcomes.

UT Dallas

April 20 – Huseyin Cavusoglu to Present “Is Free Shipping Really Free? Strategic Implications of Membership-Based Free Shipping Programs of Online Marketplaces”

September 15th – Indranil Bardhan to Present: “Measuring Relative Performance of Accountable Care Organizations: The Role of Health Information Technology”