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20 September 2017, Volume 25 Issue 9 Previous Issue    Next Issue

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Re-estimate Revealed Comparative Advantage Based on Value Added Exports and Trade Heterogeneity:An Analysis for China TIAN Kai-lan, ZHU Kun-fu, YANG Cui-hong 2017, 25 (9):  1-10.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.001 Abstract ( 1312 )   PDF (1602KB) ( 1221 )   Save The concept of revealed comparative advantage (RCA), proposed by Balassa (1965), has proven useful in many research and policy applications. In standard applications, it is defined as the share of a sector in a country's total gross exports relative to the world average of the same sector in world exports. However, with the increasing international fragmentation of production and the evolution of global value chain revolution, the problem of double counting of certain value-added components in the official trade statistics suggests the traditional computation of RCA could be misleading since it ignores both domestic and international production sharing. In order to remove this distortion, some authors have proposed using domestic value added in exports to substitute for gross exports as domestic value added in a country's exports describes the characteristics of a country's production.In this paper, this new substitution is followed,and multi-regional input-output model which is rooted in Johnson and Noguera (2012) is applied to analyze Chinese competitiveness of export and give the contrast analysis with other countries using the World Input-Output Database. The results show that China's comparative advantage sectors are still concentrated in primary products sectors and labor-intensive sectors such as agriculture and textiles during the period of 1995-2011. Although the competitiveness of some technology-intensive sectors is increasing over the years, the traditional RCA overestimates the growth rate. Furthermore,it is pointed out that previous literatures ignore the prevalence of processing trade in China when computing the new RCA of Chinese sectors. In this study, the new RCA of Chinese industries is re-estimated using OECD world input-output tables which distinguish China's processing trade, by taking into account the trade heterogeneity in production technology. The results reveal that processing trade is quite a significant contributor to the RCA of China's technology-intensive manufactures while traditional labor-intensive manufacturing goods depended more on normal trade rather than processing trade. References | Related Articles | Metrics

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Pricing Warrants Bonds under Portfolio Constraints HU Chang-sheng, CHENG Zhi-fu, CHEN Jing, XIONG De-chao 2017, 25 (9):  11-18.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.002 Abstract ( 1167 )   PDF (1481KB) ( 743 )   Save Warrants bond is one of innovative financial instruments on investment and financing markets in recent years. The traditional approach to model warrants bond is to copy the pricing theory of convertible bond. In this paper, theory is combined with practice in real life to compare the terms and conditions of warrants bond and convertible bond and it is found that there are many differences between those two bonds, including coupon, maturity, exercise price, put and call provisions and credit etc. Therefore, it is necessary to build a more suitable pricing model for warrants bond. Learning from Tsiveriotis and Fernandes(1998), it is recognized that equity and debt components of warrants bonds are also subject to different default risk and derived a pair of coupled differential equations that can be solved explicitly. Basic value of warrants bond includes two parts, warrant's value and bond's value, where the latter is proved to be equivalent to a risk-free bond minus corresponding quantity put options. Dilution rate when conversing should be the dilution rate of equity ration. Besides, considering the domestic market still exists some investment restrictions currently, warrants bond is valued within the framework of structure models and a new pricing model is established under portfolio constraints in the markets. Based on those, contingent claims are modelled under this market hypothesis, and the assumptions of Black and Scholes(1973) pricing model is relaxed, introducing more realistic factors, studying warrants bond pricing problem under different market conditions in depth. The pricing of warrants bonds which in unconstrained case is presented. The pricing of warrants bonds and investment portfolios under prohibition of short-selling and borrowing are discussed. As portfolio constraints obviously exist in reality, it is meaningful to build such a structure model.It shows that the model not only can reflect portfolio constraints in the markets, but also can capture the real-time changes on financial lever of the company very well. References | Related Articles | Metrics

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Modeling and Forecasting Volatility of Chinese Stock Market Based on Dynamic Estimation Errors SONG Ya-qiong, WANG Xin-jun 2017, 25 (9):  19-27.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.003 Abstract ( 932 )   PDF (1269KB) ( 1260 )   Save As high-frequency data is widely used in forecasting stock volatility, we propose a new family of easy-to-implement models based on realized volatility, which is constructed from the summation of the squared high-frequency intraday returns. In this paper, the estimation error of the realized volatility is assumed to obey the assumption of heteroscedasticity. When modeling the volatility of stock market, we set the autoregressive coefficients of the model according to the change of estimation errors' variances and get HARQ (F) model. In the meantime, we propose HARQ (F)-CJ model and LHARQ (F)-CJ model in combination with the jump behavior and leverage effect of Chinese stock market volatility to improve the fitness and predictive power of the realized volatility model. We suppose, the larger the estimation error's variance of the realized volatility or the continuous component in the current period, the worse its interpretation of the latent volatility in the future,and the smaller the corresponding coefficient is. Through an empirical study on the high-frequency data of the Shanghai Composite Index from December 31st, 2015 to January 2nd, 2001, we find that based on the assumption of heteroscedasticity in the estimation errors, dynamic coefficients can improve the fitness and the predictive power of the realized volatility model. Above all, the dynamic adjustment of daily regression coefficient based on estimation error variance is the key to improve the fitness and predictive power of the model. The LHARQ-CJ model in combination with both the jump behavior and the leverage effect of the Chinese stock market is considered to show the best performance in all related models. Finally, this research has made its contribution in modeling and forecasting Chinese stock volatility with dynamic estimation errors and dynamic autoregressive coefficients. References | Related Articles | Metrics

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The Inclusive Finance, Bank Loans and Financing of Small Private Business Microfinance Loan-Based on Matching Credit Risk and Credit Rating SHI Bao-feng, WANG Jing, CHI Guo-tai 2017, 25 (9):  28-36.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.004 Abstract ( 1321 )   PDF (1832KB) ( 892 )   Save One of the main tasks of credit rating is to distinguish different clients using loss given default (LGD) parameter. However, it is very common in reality that many credit rating systems seem properly if we only look at their indicators, customers with higher credit rating still have higher corresponding LGD in those systems. Therefore, an ideal credit rating result should meet the credit risk-rating match-up standard that the credit rating increases with the decreasing LGD. Secondly, the existing credit rating results don't match with the target profit point of commercial banks, so the credit rating approaches do not have the functions of credit decisions. Bankers or credit clerks cannot locate the qualified customers who can realize the bank's target profit. To fill in the above gaps, this paper advances in three aspects. First, based on considering small private businesses' LGD and achieving banks' target profit, a novel credit rating ideal is put forward that the higher credit rating comes with the lower corresponding LGD. Second, a nonlinear programming credit rating model which is consisted of two objective functions and three constraint conditions has been created. The constraint condition 0 < LGD1 < LGD2 < … < LGD9 ≤ 1 can ensure that the credit rating result meets the credit risk-rating match-up standard. And the objective function max f=(N1 + N2 + … + Nj)/N can guarantee that the number of customers to get loans on the premise of achieving banks' goals profits is maximal. It reflects the inclusive finance concept that credit funds benefit more small private business. Third, by using a Chinese national commercial bank's 2157 small private business microfinance loan samples from 29 provinces, the proposed model has been verified. The empirical results show that by designing a reasonable credit rating mechanism, we can go out of the dilemma that commercial banks were reluctant to lend, the plight of honest merchants can not be got loans. Our research not only has practical significance for credit risk assessment of the 2157 small private business microfinance, but also offers a new insight into credit risk decision evaluation of customers in other commercial banks in the world. In addition, a new reference is provided for CBRC and commercial banks practicing the inclusive finance. References | Related Articles | Metrics

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Research on Effect and Mechanism of Financial Contagion with Heterogeneous Traders ZHANG Yi, LIU Zhi-dong 2017, 25 (9):  37-45.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.005 Abstract ( 942 )   PDF (1361KB) ( 646 )   Save Under the background of the deepening of the global financial integration, financial crisis erupted more and more frequently since the 1980. Thus, measuring the integration of financial markets within a country or across national borders has been a subject of keen interest in financial economics. In measuring financial contagion a number of methodological approaches have been utilized in the past, mainly focusing on the test of financial contagion effect. There is little literature from the micro-perspective of the behavior of traders to explore the financial crisis of the infection mechanism. In this paper, an empirical asset pricing model inspired by the heterogeneous agents literature, a market with time-variation in the source of price changes, is proposed in order to look at the contagion question from a different perspective. By doing so, we attempt to lay bare the micro-mechanisms behind the changing mutual dependency between asset markets. Changes in asset prices are driven by three different sources:fundamentalists, chartists, and internationalists. The relative importance of each source is time-varying conditional on its impact on price in the previous period. The notion of contagion is incorporated by modelling two markets next to each other; the fact that the domestic market is (partly) driven by information from the foreign market introduces conditional interaction between the two risky assets. The model reduces to a VECM with time-varying coefficients and an economic underpinning. This time-variation is induced by the fact that the weight put on the different sources changes through time. The model is estimated for the U.S and Hongkong stock markets monthly data surrounding the 2007 subprime crisis and 2010 European debt crisis. Results imply that the U.S stock market is dominate by fundamentalists in most of the time, but during the crisis period, the influence of internationalist is raising apparently; for Hongkong stock market, chartist is the main source of price changes, the attention for foreign markets is increasing during the crisis period. However, there is no clear evidence of fundamentalists for price changing. The combination of shift-contagion and heterogeneous agents has never been explored, to our best knowledge.Thus our study provides a new perspective and analytical tool for understanding the process of financial crisis contagion. Future research in this field can spread into different directions. The dual market situation is examined in this paper. Our research can be explored to a multi-markets setting for future study. References | Related Articles | Metrics

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Pricing Longevity Bonds based on Double Exponential Jump Diffusion Model CHAO Wen, ZOU Hui-wen 2017, 25 (9):  46-52.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.006 Abstract ( 937 )   PDF (1545KB) ( 672 )   Save With the extension of life expectancy, the countries in the whole world must face the fact that aging population brings longevity risk. Longevity risk has put severe impacts on security departments, insurance companies and the governments in the world. Therefore how to manage it effectively has become the focus of study by the academic society. In view of the fact that the research model of longevity bonds has not considered the positive and negative asymmetry jump of population mortality, and in order to hedge the risk of longevity, based on Lee-Carter framework, a double exponential jump diffusion model is introduced to measure the positive and negative asymmetry jump of mortality rates, the interest rate is described with CIR. And in order to make the pricing of bonds closer to the real market, the risk neutral pricing is used to price the bond in the incomplete market. Empirical analysis with the population death data shows that the ability of this model is significantly better than the existing model when measuring longevity risk. Therefore, the use of this model for bond pricing, not only can provide a more reasonable pricing, but also can improve the life insurance companies to deal with the risk of longevity, then can promote the further development of life insurance industry in China. References | Related Articles | Metrics

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Entropy-Controlled Principle based Multi-objective Industrial Structure Optimization Model in the Tertiary Industry:A Case Study of Beijing DONG Xue-fan, LIU Yi-jun, LIAN Ying 2017, 25 (9):  53-62.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.007 Abstract ( 935 )   PDF (1361KB) ( 605 )   Save China's 13th Five-Year period (2016-2020) is the critical period for building a moderately prosperous society, requiring local governments to abandon the only GDP rate theory and cite the" new normal "economic transformation as the kernel in development. In addition, the proportion of the Tertiary Industry should be increased as well in order to integral elevate the industrial competitiveness of China. Therefore, how to effectively and quickly complete the transformation of the economic structure in China has been paid widespread attention by scholars. However, previous studies focusing on this problem are mostly lack of the identifications of input proportion for various industries and the entire stability of the industrial structure distribution. Based on this background, the optimization of the Third Industry structure is taken as the research subject, and the investment portfolio theory and Entropy-Controlled principle are introduced into this problem, in order to provide decision support for government departments to establish scientific industrial structure policies in accordance with the 13th Five-Year Plan. Meanwhile, a new multi-objective industrial structure optimization model solved by the Pareto based GA algorithm is developed, in which the synthesis entropy is used to comprehensively measure the quantity and quality of the industrial structure development, and the industries within the Third Industry are seen as a group of securities. In addition, five aspects, including the economic output, energy consumption, carbon emissions, employment level, and the equity of industrial distribution, are taken into account. Moreover, a case study of Beijing City is also implemented, in which the authors used the proposed model, adopting the data from 2013, to predict and adjust the tertiary industry structure in 2014. The results show that the gained several groups of industrial structural portfolios are relatively better than the actual data with respects to above five considered aspects, accordingly proving the effectiveness of the proposed model and the conclusion that through reasonable adjustment of industrial structure it is possible to improve the economic output, employment level and the equity of industrial distribution without increasing energy consumption and carbon emissions. References | Related Articles | Metrics

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The Value of Factor Financing,A Foreign Exchange Risk Consideration REN Long, LIU Jun, ZHOU Xue-guang 2017, 25 (9):  63-70.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.008 Abstract ( 1156 )   PDF (1300KB) ( 516 )   Save As the changing from seller's market to buyer's market, small and medium sized suppliers are facing more challenges than ever before. To acquire the market share, they should rely on sell on credit, rather than the traditional letter of credit. Abundant working capital has been occupied with accounts receivable bid on foreign currency. These small suppliers face not only such liquidity problems, but also deprecation of accounts receivable due to foreign exchange fluctuations, which become more volatile afterthe breakdown of Bretton Woods System. To help these suppliers to grow, some financial institutions step up to offer financial scheme such as factor financing. A theoretical model with a budget-constraint supplier, who makes integrated production and financial decisions when faced with both demand risks and foreign exchange risks,is built up. The supplier is a risk averse agent with mean-variance considerations. Firstly, the supplier's optimal integrated decisions are shown. When the variance constraint is active, the optimal factor financing ratio is increasing with the value of the account receivable. Other parameters have negative impact on the production decision and factor ratio decision. It is found that factor financing indeed mitigates the liquidity problem of the supplier by expanding the feasible region for production decision. While this financing scheme may have double effects on the supplier's risk exposures, on one side it will eliminate the foreign exchange risks, on the other side it will indeed increase the demand risk. Factor financing may not always add value to the supplier all the time. The SME managershould balance these two effects depending on thereal situation. References | Related Articles | Metrics

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The Price-Volume Relation of the Shanghai Stock Index Under the Perspective of Uncertainty SHI Jian-xun, WANG Pan-pan, He Zong-wu 2017, 25 (9):  71-80.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.009 Abstract ( 1024 )   PDF (2464KB) ( 681 )   Save In literature, the dynamic price-volume relation is examined by Vector Autoregression (VAR thereafter) model. In this paper, the conventional VAR approach is extended to account for the impacts of structural changes and volatility levels, which are common to China.Due to dramatic responses of China's stock market in recent years, especially two periods of considerable volatility in the years of 2007-2008 and 2014-2015, it is reasonable to conjecture that the structural changes and volatility levels could have substantial influence on the price-volume relation of Chinese stock market. The price-volume relation of the Shanghai stock market is examined with daily data from the year of 2003 to 2016, and contribution is made to the literature by estimating the price-volume relation in a VAR framework with structural breaks and volatility thresholds. As a result, more evidence and robust inferences is obtained:First, the evidence indicates that there exist significant time breaking effects. Second, the high-low volatility effects are substantially. Finally, a linear causal relation is identified from price to volume, which clearly rejects the public views. References | Related Articles | Metrics

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Positive Feedback and Regulatory Spillover Effect During Market Crash DING Yi-jun, FENG Yun 2017, 25 (9):  81-96.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.010 Abstract ( 1095 )   PDF (3590KB) ( 786 )   Save In this essay, the cross-market risk events caused by temporary regulatory restrictions are discussed under the circumstances that markets are linked much more closely than ever before. Over the past three decades, financial market risk events appeared one after another. Especially when facing sharp market crashes, financial regulators tend to urgently introduce a series of stringent regulatory restrictions to stabilize the market. However, it has been found that these temporary control measures can stabilize part of the market in the short term but may have a spillover effect on the associated market and lead to greater turbulence due to the tightening of financial markets, and also damage the quality of financial markets as a result. During the mid-2015 market crash in China, the China Financial Futures Exchange adjusted three times during a short period (August 25, August 28 and September 2) the exchange margin, intraday open position and intraday close position fee, which aimed at controlling over-speculation trades. However, the trading restrictions on stock index futures were likely to further reduce the spot market liquidity, increase the spot market selling pressure, which may cause the formation of positive feedback effect, thereby increasing the futures and spot market abnormal fluctuations. Based on this view, the VAR model is used to study the positive feedback effect between the CSI 300 index yield (CSI 300 stock index futures yield) and the volume. In the year 2015, a total of 23 intraday extreme market crash events are selected as the research sample (including 16 events before stock index futures trading restrictions, and 7 events afterwards). Focusing on the strict trading limits implemented on the stock index futures market during 2015 market crash, it is found that liquidity shrank in the stock index futures, and a significant positive feedback between return and order flow lead to the self-actualization of extreme events. Institutional investors fail to hedge risk via stock index futures due to the strict trading limits, which strengthens the selling pressure on stock market and causes the market crash. Therefore, regulators should comprehensively analysis the structure changes in the current market when using regulatory restrictions to avoid policy failure. References | Related Articles | Metrics

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A Study on Investment Strategies for Distributed Wind Power Stations Based on Real Options HUANG Shou-jun, YU Bo, ZHANG Zong-yi 2017, 25 (9):  97-106.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.011 Abstract ( 1071 )   PDF (1607KB) ( 1105 )   Save Under the premise of contribution margin varying randomly,distributed power generation first serves self-use as well as its economic characteristics are considered. Based on the real options theory,the option pricing model for investment opportunity in distributed wind power stations is established,and the contribution margin threshold,optimal investment scale,the option value and expected waiting time of delayed investment are solved. A case study is presented to validate the main conclusions,and give the influence variation of different parameters on the equilibrium state. It is found that for distributed wind power stations with limited investment time,contribution margin threshold,optimal investment scale,and expected waiting time are all positively related to the expected increase and variation rate of contribution margin. Meanwhile,the option value of delayed investment has different correlations with these two rates,and the significances of the influences are different. In a certain condition and range of contribution margin,the option value of delayed investment and expected waiting time increases and decreases respectively,with the increase of the proportion of generated wind power for self-use or initial contribution margin. However,the proportion of generated wind power for self-use does not influence the optimal investment scale,and the initial contribution margin does not influence the contribution margin threshold and optimal investment scale. The decision-maker's optimal decision should take both contribution margin threshold and optimal investment scale into consideration. References | Related Articles | Metrics

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Geek Economy,Community Ecology and Pricing Decision in Crowdfunding LIU Zheng-chi, MA Tao, ZHOU Sha, HE Yan 2017, 25 (9):  107-115.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.012 Abstract ( 1275 )   PDF (1330KB) ( 710 )   Save The Internet crowdfunding which based on "innovative personalization" and "investment democratization" has conspicuous characteristics of the network economy era. In this paper, the "geeks economy" property of the Internet crowdfunding is analyzed and the logical relationship between perceived value and pricing mechanism is proposed. From the discussion, a differential pricing model of crowdfunding product is built up and equilibrium analysis on the creators' optimal pricing strategy is made. The result shows that the existence of "internet geeks" is the basis of the differential pricing strategy of internet crowdfunding, and the formation of "internet community" greatly influences the investment behavior of crowdfunding investors. To be specific, at first,crowdfunding product' price floor (threshold price) should be equal to the low perceived value of investors, the price ceiling (overflow prices) should be between the low perceived value and high perceived value. Secondly, the "altruism motivation", "reputation effect" and "cognitive difference" within the internet crowdfunding community can lead to a further strategic adjustment of the optimal pricing mechanism. Among them, "altruism motivation" and "reputation effect" help to extend the interval of differential pricing, while "cognitive difference" leads to a more narrow interval. A theoretical basis is provided for understanding and optimizing the operation mechanism of the Internet. References | Related Articles | Metrics

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Semi-parametric Additive Beta Regression Model with its Application FANG Kuang-nan, YAO Zi-wei 2017, 25 (9):  116-124.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.013 Abstract ( 1091 )   PDF (2295KB) ( 809 )   Save In regression analysis, classical linear regression or its transformation methods are not satisfied when response variable is restricted to the interval (0, 1), that is, proportional or fractional data, which is common in Economics, education, medical science etc. One of the most promising approaches is the beta regression proposed by Ferrari and Cribari-Neto. However, the traditional beta regression is confined in the linear situation and thus lacks flexibility. Besides, it has specification error if the true model is not linear. Borrow the idea from generalized additive model (GAM) proposed by Hastie and Tibshirani, a semi-parametric additive beta regression model is proposed. It is assumed the model can be decomposed into parametric and nonparametric parts. For the nonparametric part, the local scoring algorithm is used to fit the unknown function and AIC is used to choose the best smoothing (tuning) parameters. Two simulation examples under different scenarios are conducted, the simulation results shows that semi-parametric beta regression model perform well. Comparing to traditional models, the proposed semi-parametric beta regression model is the best and is significantly better than other traditional models. The proposed model is applied on medical expenditure data to explore the factors of the medical expenditure portion in patients' overall expenditure. It is found marital status, age of householder, income, the number of inpatient and outpatient are the significant factor for the proportion of medical expenditure in overall expenditure. References | Related Articles | Metrics

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Analysis on Factors of China's Energy Intensity Changes for 1997-2012:Based on Structural Decomposition Analysis LI Ling, ZHANG Jun-rong, TANG Ling, YU Le-an 2017, 25 (9):  125-132.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.014 Abstract ( 1313 )   PDF (1403KB) ( 1221 )   Save With the rapid development of China's economy, two conflicting problems arise, i.e., increase of energy consumption and shortage of energyresources. Energy intensity, measured as energy use per unit of output,can well reflect comprehensiveenergy utilization efficiency. Thus analyzing the major factors of energy intensity changes becomes a basic issue for improving energy intensity.Under such a background,the structural decomposition analysis (SDA) is used to capture the driven factors of China's energy intensity changes. First, energy intensity changes are decomposed into five components-energy consumption coefficient, Leontief inverse coefficient, final demand structure, final demands by category, and final energy consumption coefficient. Second,the contribution of each component to China's energy intensity changes is evaluated to determine the predominant factors. As for database, monetary input-output table is coupled with energy consumption to establish physical-monetary energy input-outputtables for the years 1997, 2002, 2007 and 2012, ata constant price level of 2002. Some interesting findings are obtained in the empirical study:(1) From 1997 to 2012, China's energy consumption keptan increasing trend, whilethe energy intensity reduced with fluctuations.(2) The energy consumption coefficient wasthe leading factorfor China's energy intensity changes.(3) However, the influence of technology coefficient (Leontiefinverse)gradually increased and exceededthat of energy consumption coefficient during 2007-2012.Furthermore, these results provide helpful insights into policy designs for energy conservation and emissions reduction in China. References | Related Articles | Metrics

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Min-max Multiple Sink Location Problem in Dynamic Path Networks with Different Traffic Capacity Constraint ZHAO Rong, LIU Ke-yan, REN Pei-yu 2017, 25 (9):  133-140.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.015 Abstract ( 1050 )   PDF (1253KB) ( 641 )   Save From the viewpoint of disaster prevention from city planning and evacuation planning, it is important to establish effective evacuation planning systems against large scale disasters. Considering the different roads have different capacity, the k-sink location problem in dynamic network with different capacity is proposed. In our model, each vertex supplies with a certain nonnegative value and each edge has a capacity representing the least upper bound for the units flowing into the edge per unit time. It is found that the time for a vertex weight ω to go through the edge e which have a capacity ce and a length le is leτ+ω/ce-ω/c, where τ is a constant representing the time required for traversing the unit distance of per unit weight and c is the flow of ω. Our goal is to find k sinks and k-1 divides which minimize the maximum time for all units flowing into the corresponding sink that the divides have provided. First, the 1-sink location problem is analyzed and it is found the monotonicity and unimodality of the evacuation completion time. Then based on some new properties, the linked list data structure is used to store the completion time and the minimum road capacity on their way to the sink of the maximum congestion points, which make the solution process easier. On this basis, an O(nlogn) time algorithm is developed to solve the 1-sink location problem. Finally, an O(knlogn) time recursive algorithm is developed to solve the k-sink location problem based on dynamic programming, where n is the number of vertices in the given network. Since we are the first to analyze the sink location problem in dynamic network with different capacity, our research may be useful to the further research such as the sink location problem in dynamic tree network with different capacity and the sink location problem in dynamic network with interval weight and different capacity. References | Related Articles | Metrics

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Diffusion of Mobile Service Product Adoption:A Data-Driven Study RAN Xiao-bin, LIU Yue-wen, JIANG Jin-hu 2017, 25 (9):  141-147.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.016 Abstract ( 957 )   PDF (1468KB) ( 1270 )   Save With the continuous development of information technology, the communication between individuals becomes easier. Meanwhile, the emergence of various types of e-commerce platforms makes the decisionsof individuals become more and more interdependent. The researches of innovation diffusion (starting from the classical Bass Model)focus on the diffusion process from the perspective of market level. However, the existing studies have some limitations, such as the completely connected network which divorced from practice,and the overlook of the heterogeneity between individuals. Thus, more researchers focus the innovation diffusion from the perspective from individual level, and connect individuals' adoption behavior with markets' diffusion results. And, this connection should not lack the help of social networks. Luckily, benefited from the improvement of accessibility of social network data, the studies are able to realize.This study focuses on the influence of peers on the individual behavior of new product adoption, and connects the individual behavior and market diffusion process via social networks. A unique dataset contains more than 1.2 million users' information is taken, which come from the biggest online social network in China. It has several information including a complete social network, individual attributes and adoption behavior. Firstly, a shuffle test is used to identify the peer influence. But, the endogenous from homophilycan not be ignored. Then, the PSM model with both static and dynamic model is used to control the endogenous effectively. And the effect of peer influence is found to exist in adoption process. Furthermore, it accounts for 72% of the total factors. In addition, it is found that the network structure of individuals impacts the peer influence, and the relationship between the tie strength and peer influence has a positive moderating effect. A method and empirical evidence is provided for the future studies. References | Related Articles | Metrics

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Trade Credit Contract in a Supply Chain under Dual Asymmetric Information WANG Zhi-hong, ZHANG Yi, GUO Jian-feng, XIA Qing 2017, 25 (9):  148-158.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.017 Abstract ( 953 )   PDF (1149KB) ( 664 )   Save There exists the asymmetric information in supply chain management. Information asymmetry could cause adverse selection and moral hazard which often coexist. Trade credit is not only an effective short-term financing channel but also a kind of incentive and coordination mechanism in the supply chain. The incentive effect of trade credit on the supply chain is considered under the coexistence of adverse selection and moral hazard. In the two-tier supply chain system consisting of a manufacturer and a retailer, the manufacturer provides trade credit to the retailer, allowing the retailer to delay payment for goods.Based on game theory and incentive mechanism theory, the manufacturer provides the retailerwith trade credit contract menu {t,T} whichincludes trade credit period t and transfer payment T. The contract menu couldencourage the retailer to reveal its true inventory holding cost information and improve its sales effort level. First, we construct trade credit incentive modelsunder single-information asymmetry (moral hazard). Based on this, trade credit incentive models are built under dual asymmetric information. The corresponding optimal trade credit contracts are obtained by adopting the method of extremum principle and mathematical programming. Further, the retailer's optimal sales efforts level and optimal order quantity are deduced. Under the two different information structures, the optimal decisions of supply chain members and the profits of the two members and the whole system are compared, and then the incentive effects of trade credit are discussed. By numerical simulation, the effectiveness of the optimal trade credit contract is verifiecl and then the influence of the retailer's inventory holding costs on the contract parameters, the retailer's decision variables and the profits of the supply chain,is analyzed. The results show that the reasonably designed trade credit contracts could motivate the retailer to disclose its real cost and also inspire the retailer to make enough efforts. References | Related Articles | Metrics

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A City Logistics Network Optimization Model for Large Chain Retailers under Online-Offline Channel Integration ZHAO Quan-wu, ZHAO Jun-ping, LIN Ya 2017, 25 (9):  159-167.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.018 Abstract ( 1521 )   PDF (989KB) ( 837 )   Save In this article, joint location-assignment problem is studied for designing an Urban Logistics Network (ULN) with multiple intermediate depots (IDs) and terminals of ULN. The key decisions are where to locate the intermediate depots (IDs) and how to assign terminals to IDs such that the total network cost is minimized. A large-scale static and deterministic integer programming model is presented solving a joint location-assignment problem of large chain retailers. To solve this model, a more efficient hybrid algorithm integrated with Genetic algorithm and Tabu search algorithm is put forward based on heuristic searching criteria. Our methodology is illustrated with the Urban Logistics Network from a leading Chinese retailer (Suning) in Chongqing. Numerical analysis suggests that optimal solutions can reduce the total network cost between 2.92%~14.36% by comparison with the current ULN.Delivery costs of "Last Mile" account for total urban logistics network costs more than 60%. Vehicle type is a deterministic factor to total urban logistics network costs. The effects of changing parameter values on the optimal solutions are also studied and some management implications are pointed out. References | Related Articles | Metrics

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The Structure and Evolution of Institution Collaboration Network on Management Sciences in China WU Deng-sheng, LI Ruo-yun 2017, 25 (9):  168-177.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.019 Abstract ( 1210 )   PDF (2061KB) ( 999 )   Save With the expanding penetration of disciplines, more and more organizations realize that research cooperation conducive to the development of scientific research and attach great importance to research cooperation. The cooperation network between organizations is analyzed from co-authorship paper, which will help to understand the significance of research cooperation at a deeper level and to guide the direction and mode of research cooperation. Recently, Management Science has been experiencing rapid development and playing increasing important roles in the economic prosperity and social development in China. However, the research about the cooperation network about Management Science in China is still relatively scarce. Based on Mainland China scholars' 6670 papers included by 137 important Management Science journals (rating A or A+) from 2001 to 2015, social network analysis method is adopted to make a statistical analysis of the structure and evolution of institution collaboration network on management sciences in Mainland China. The empirical results show that the institutional-level cooperation rate and cooperation degree of about Management Science in China are 81.31% and 2.32 respectively. Moreover, the cooperation rate and cooperation degree change little during 2001 to 2015. Indicators of the overall network analysis reveal that the most cooperation relation among the institutions is feeble. The number of connected subgraphs is reduced with the increasing nodes in the network. The core-edge analysis shows that Hong Kong's research institutions play an important connection role among the cooperation network. The results of degree centrality, betweenness centrality, and closeness centrality indicate that the Chinese Academy of Sciences is the most influential institution among the cooperation network. Moreover, there is a strong positive correlation between the centrality indicators and the number of articles, and the number of being cited. References | Related Articles | Metrics

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The Research of Influence of Different Carbon Abatement Policies and Carbon Sensitivity Over the Supply Chain LIU Chao, MU Jing 2017, 25 (9):  178-187.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.020 Abstract ( 990 )   PDF (1553KB) ( 892 )   Save In recent years, the carbon emission coupled with production systems has been gaining more attention from both industrial practitioners and academic scholars. To curb carbon emission, cap-and-trade scheme is often utilized by government as a cost effective mechanism to reduce carbon emission without sacrificing economic robustness. In order to calculate free carbon permits, two types of historical-based methods are often adopted, i.e. grand-fathering and benchmarking. The grand-fathering approach is used to allocate the free carbon allowance (cap) according to historical total emission volume on a yearly basis. In contrast, the benchmarking approach cap is calculated on the basis of industrial best-practice carbon emission per production unit. In this paper, a two-echelon supply chain consisting of a dominant supplier and a manufacturer where they run a Stackelburg game is investigated. Then the impact of the two approaches upon production decisions such as optimal order and production quantity, per unit volume of carbon emission abatement (PCEA) and wholesale price is analyzed. Taking carbon conscious factor of market demand into consideration, news vendor models in four scenarios in which the cap-and-trade policy affects the upstream or downstream players respectively are solved. The results show that the benchmarking approach, although is intuitively viewed as a more rigorous method in terms of environmental constraint, encourages the downstream player to improve order quantity, i.e. the optimal order quantity is bigger by the constraint of benchmarking method. Meanwhile, the PCEA is higher under benchmarking approach than it is under grand-fathering method, therefore the total volume of carbon emission abatement is higher under benchmarking scheme. In addition, it is suggested that the downstream player will increase order quantity under benchmarking scheme regardless of the supply chain's node being affected by the cap-and-trade policy. When the market demand is carbon conscious, i.e. linearly related to PCEA, the downstream player's order quantity will depend on PCEA even without the constraint of cap-and-trade. Finally, managerial insights are obtained, which include (1) the government use benchmarking approach to allocate cap is a better choice in terms of improving the total carbon emission abatement volume; (2) the benchmarking approach is not always effective under some circumstances where it is affected by carbon trade price, carbon technical coefficient and stochastic factors etc. References | Related Articles | Metrics

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Newsboy Problem with Probabilistic Loss Aversion and Loss Aversion MA De-qing, HU Jin-song, JIANG Wei, CHEN Liang 2017, 25 (9):  188-196.  doi: 10.16381/j.cnki.issn1003-207x.2017.09.021 Abstract ( 1257 )   PDF (1297KB) ( 1001 )   Save It is found that the newsboy has loss of disgust and loss of probability aversion characteristics. In the paper, the Newsboy model with loss aversion and probabilistic loss aversion under shortage cost is studied. Using stochastic profit distribution functions and ranking functions when order quantity is less than maximum loss equivalent and order quantity is greater than maximum loss equivalent, its prospect value function is derived, and the nature of prospect value is revealed. The results show that the prospect value function is a continuous and non differentiable convex function, in which non differentiable points is in maximum loss equivalent; and Newsboy models with loss aversion or risk neutral are its special case. The analysis shows that:under the optimal order quantity being less than the maximum loss equivalent, the optimal order quantity increases with the increase of the degree on the extreme gain and unfavorable results. Under the optimal order quantity being greater than the maximum loss equivalent, the optimal order quantity increases with the increase of the degree on the extreme gain, and the optimal order quantity reduces with the degree on the extreme unfavorable results. The numerical results show that the optimal order quantity increases with the increase of the sensitivity of non extreme gain and non extreme loss. With the increase of the loss aversion coefficient, the optimal order quantity decreases. This study is helpful to understand the impact of the behavioral characteristics of newsboy on decision making. References | Related Articles | Metrics