Thought Leadership

With the rapid growth of omnichannel retailing and the takeaway delivery economy, the classic point-to-point mode for on-demand delivery is deficient in delivery capacity, coverage area, dispatching efficiency, and courier safety assurance. Inspired by the success of Dabbawala, a historical Indian company for lunch delivery, we propose a novel public on-demand delivery service system that uses the public transit network to satisfy stochastic delivery demands. In particular, the proposed system includes a radial public transit network for intermediate transshipment, as well as couriers with e-bikes for terminal pick-up and drop-off. Our research aims to generate system design that minimizes the sum of penalty costs from lost sales and operational costs associated with courier terminal delivery distance. Solving the integrated system optimization problem relies on incorporating operational details, especially the allocation strategies of the lines’ capacity and the couriers’ terminal traveling modes. For the former, we propose a novel flexible design, called dual long-chain design, to improve flexibility. For the latter, we propose an elegant approximation of optimal service region partitioning that minimizes the expected terminal delivery distance and the resulting costs, without compromising delivery timeliness. Leveraging the theoretical results of the operational strategies, we simplify the integrated optimization problem and propose an efficient approximation algorithm. Finally, we validate the advantage of the proposed system over classic point-to-point delivery in satisfying demands and reducing costs through extensive numerical experiments, providing managerial insights in handling massive on-demand delivery demands and utilizing the idle capacity of the public transit system.

Utilizing 1.54 million judicial judgments from enterprise-to-enterprise litigation between 2014 and 2019 in China, we provide evidence of municipal leaders exerting influence over the courts to favor enterprises connected to them. By leveraging variations in enterprise connections resulting from official turnover, we show that enterprises with connections to party leaders have higher chances of winning in business litigation than unconnected enterprises. We also examine the impact of the staggered roll-out of circuit courts, a top-down institutional reform, on cronyism in the courtroom. Our findings show that this reform has effectively reduced the judicial advantage enjoyed by connected enterprises by two-thirds. By contrast, the trial live-broadcasting reform increases visibility but is not associated with a reduction in the effect of political connections, suggesting that different forms of judicial bias require different monitoring approaches.

Many emerging economies employ preferential credit policies that target selected sectors. This paper quantifies the implications of such policies for aggregate productivity and welfare. Using Chinese firm-level data from 2009–2020, we first document that sectors with higher markups receive larger credit subsidies and exhibit higher revenue-based productivity. Motivated by these facts, we develop a multi-sector quantitative model with endogenously determined markups and calibrate it to match the distribution of sales both within and across sectors. We find that preferential credit subsidies raise aggregate productivity and welfare by reallocating market shares toward high-markup sectors. These gains persist in an extended framework with endogenous firm entry.