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In this paper, using data from indirect auto lending and a structural model of external sales representative (ESR) behaviour, we investigate (1) the role of commissions as a potential tool to influence ESRs' pricing decisions under limited authority, (2) the impact of optimized commissions on firm profitability, and (3) the implications for customer welfare. The results provide strong evidence for ESRs being strategic (vs. myopic) in their pricing and effort decisions; and in both cases, strategic behaviour is inversely proportional to customer risk. Moreover, once optimized, commissions are an effective tool for firms to bridge the profitability gap between centralized pricing and pricing delegation. Our analyses on social justice and fairness reveal that customer groups along the dimensions of customer risk, income class, and gender, which have been traditionally marginalized in society, suffer from inequities in the indirect-lending ecosystem. While, the optimization of commissions does not intensify these biases, we found females to be the exception, and that the inequities due to gender bias not only persist in the optimized regime, but also deepen. Through counterfactual simulations, we propose two policies for firms to minimize social inequity, which helps them balance immediate profit-maximizing goals with responsible AI initiatives. [ABSTRACT FROM AUTHOR]

We consider a decentralized supply chain (DSC) under resale price maintenance (RPM) selling a limited‐lifetime product to forward‐looking customers with heterogeneous valuations. When customers do not know the inventory level, double marginalization under RPM leads to a higher profit and aggregate welfare than without RPM under a two‐part tariff contract (TT). Both RPM and TT profits are higher and aggregate welfare is lower than in a centralized supply chain (CSC). When customers know the inventory, RPM coincides with CSC. Thus, overestimation of customer awareness may lead to overcentralization of supply chains with profit loss comparable with the loss from strategic customers. The case of RPM with unknown inventory is extended to an arbitrary number of retailers with inventory‐independent and inventory‐dependent demand. In both cases, the manufacturer, by setting a higher wholesale price, mitigates the inventory‐increasing effect of competition and reaches the same profit as with a single retailer. The high viability and efficiency of RPM in using double marginalization as a strategic‐behavior‐mitigating tool may serve as another explanation of why manufacturers may prefer DSC with RPM to a vertically integrated firm. [ABSTRACT FROM AUTHOR]

The article discusses a study on an airline operating several parallel flights to transport cargo between a specific origin-destination pair. The airline has two problems that interact tightly with each other namely the problem of determining what contracts should be signed with potential allotment customers and which booking requests to accept on the spot market. Both problems interact since allotment and spot market cargo ultimately share the same capacity and the airline is penalized if this capacity is oversold. It proposes a method to coordinate allotment and spot market cargo capacity allocations for collections of parallel flights.