Omkar D. Palsule-Desai

Medical tourism creates an important policy trade-off for host countries. Foreign patients can generate revenue for private hospitals and support healthcare-sector growth, but they may also draw capacity away from domestic patients who rely on the same private providers and the public hospital system. We study when medical tourism benefits or harms domestic patients and society in the host country, and how policymakers can regulate the balance between foreignpatient demand from developed countries and domestic healthcare access in developing countries. Methodology/results: We develop an analytical model of a host country healthcare market with a private hospital, a public hospital, domestic patients, and foreign medical tourists. The model captures hospitals' capacity and pricing decisions and patients' hospital choices. We compare outcomes with and without medical tourism and examine two policy levers: public hospital capacity and restrictions on the private hospital's foreign-to-domestic capacity mix. We find that medical tourism can reduce domestic patient welfare by shifting private capacity toward foreign patients, but its effect on overall welfare depends on the cost of expanding private capacity and on how prices, congestion, profits, and market coverage adjust. Public capacity can discipline private hospital behavior, while proportionality rules that link foreign-patient capacity to domestic-patient capacity can protect domestic access. Managerial implications: The paper provides a framework for evaluating medical tourism through data-driven country contextualization. Using publicly available country and healthcare-market data, we show how the same policy can have different welfare consequences across host countries. In cost-driven settings such as India, policy should protect domestic access and redistribute provider-side gains, whereas in highly internationalized settings such as Thailand, regulating the private hospital's foreign-to-domestic capacity mix is more effective. The model helps decision makers tailor medical tourism policy to measurable local conditions.

Services such as housing, food, and healthcare are expected to be universally accessible and affordable. However, rapidly increasing cost structures and income inequality are proving to be significant impediments. Some service organizations, having recognized this situation and wanting to ensure that everyone (including those who cannot pay) meets their needs, are implementing philanthropic schemes under which customers can choose not to pay for service (Self-Selecting No-Pay, SSNP). This paper identifies conducive conditions for firms to adopt philanthropic services, examines the implications for competitors, consumers, and the entire society, and underlines factors influencing the decisions of such firms, yielding Pareto improvement in industry performance. Methodology/results: We show that philanthropic services may also increase the overall consumer surplus and, surprisingly, may also benefit the competitors, resulting in superior societal welfare. Thus, it is a strategy that lifts all boats akin to a rising tide. The reasons underlying this outcome are (i) philanthropic amplification of paying customers' willingness to pay, (ii) a faster transition of service professionals up the learning curve, and (iii) profit-driven employees' compensation savings. We develop a mathematical framework capturing these characteristics and perform a rigorous analytical and computational analysis. Managerial implications: We characterize conditions under which service providers should introduce SSNP strategies in a competitive environment and determine the optimal parameter values they should use to get the highest benefits. We demonstrate how firms adopting philanthropic service delivery strategy may respond to skilled professionals' career concerns by managing their income levels and turnaround appropriately so that the necessary harmony in cost-competitiveness with competing firms is attained and social welfare may be improved.

We study incentives and contract design when a manufacturer can select, contract, and learn about its stockists. We model this relationship using a two-period principal-agent framework in which the manufacturer is the principal and the stockists are agents. We examine how competition among the stockists for future contracts and their career concerns on the level of future compensation influence the optimal contract. We show that competition incentivizes stockists to exert more effort, whereas career concerns have an opposite incentive, particularly when the manufacturer has dominant bargaining power. By analyzing the exploitation and exploration trade-off we show, for instance, that the manufacturer may explore less when there is more uncertainty about the stockist's capability. By calibrating our model to unique contract and sales data from an Indian potato chips manufacturer, our counterfactual analysis shows that the competition raises (career concerns decrease) the stockists' effort by more than 192% (77%) and the manufacturer's value by over 6% (about 3%).

Problem definition: Onion is an indispensable ingredient of the Indian diet, and plays a vital role in Indian economy, society, and politics. The ever-lasting volatility in its prices leads to significant social unrest. In this paper, we are interested in helping decision makers to rigorously evaluate a recent policy proposal to make dehydrated onion widely available to remedy the situation. Methodology/results: Using a stylized analytical model, we look for conditions under which it is optimal to introduce a processed substitute and whether it should be managed by nonprofit or for-profit firms. We find that the solution is identified by threshold-based policies and outcomes are far better under the nonprofit management. We also find that a nonprofit processing firm may purposefully choose a strategy where consumers do not purchase its offering for a certain medium range of raw onion deterioration levels. In addition, we find that a for-profit firm would always choose to be the lower-quality substitute in the market unless the raw onion deterioration is high. We also find that when supply capacity is constrained, sales of the processed substitute might decrease with increased supply availability. Managerial implications: This is the first paper that takes perishability and consumer welfare into account in a two-period vertically differentiated market model and compares various scenarios of competition when there is consumer prejudice for the processed substitute. For India’s policymakers, we find ample evidence to work toward implementing the processed substitute policy. We go deep and discuss tailored insights for certain regions in India. We find that although improved consumer perception is favorable in general, policymakers should be careful about some unintended consequences such as increased prices and lower availability.Funding: O. D. Palsule-Desai acknowledges financial support provided by Indian Institute of Management Indore.Supplemental Material: The e-companion is available at https://doi.org/10.1287/msom.2022.1145 .

The postpandemic world requires a renewed focus from service providers on ensuring that all customer segments receive the essential services (food, healthcare, housing, education, etc.) that they need. Philanthropic service providers are unable to cope with the increased demand caused by the social, economic, and operational challenges induced by the pandemic. For-profit service providers offering no-pay services to customers, allowing them to self-select a service option, is becoming a popular strategy in various settings. Obtaining insights into how to efficiently balance societal and financial goals is critical for a for-profit service provider. We develop and analyze a quantitative model of customer utilities, vertically differentiated product assortment, pricing, and market size to understand how service providers can effectively use customer segmentation and serve the poor in the lowest economic strata. We identify conditions under which designing the service delivery to be accessible to the poor can simultaneously benefit the for-profit service provider, customers, and the entire society. Interestingly, we observe that the increasing customer valuation of the no-pay option because of a superior quality service offered by a service provider need not benefit customers. Our work provides a framework to obtain operational, economic, and strategic insights into socially responsible service delivery strategies.

Problem definition: Stockists are the entity in the supply chain who deliver to the millions of small shops that account for over 90% of retail sales in India. The stockist purchases product from the manufacturer, develops retailer interest in carrying the product, solves the logistics problem of delivery to retailers, and manages retail credit and money collection. In return, the stockist is provided assistance by the manufacturer and paid an associated margin that is a percent of the product’s retail price. We observed relatively low distribution margins offered to the stockists in India that was a surprise given infrastructure and financing challenges. We noted that the low margins are enabled by the efficiency in product delivery and demand stimulation induced by the stockist. In this paper, we focus on the analysis of screening contracts offered by manufacturers to stockists. Methodology: We use a principal–agent model structure and model the routing cost, inventory cost, and demand impact of the stockist’s capability. We then use a substitutes or complements relationship between manufacturer assistance and stockist impact to understand the optimal contract structure—i.e., level of assistance and associated retail margin. We describe the economics associated with the stockist, provide data regarding the margins and assistance provided by the manufacturer, and use the model to understand their use in developing an effective supply chain. Results: Our model uses three parameters to show that a manufacture can adjust the level of spatial retailer intensity and thus the impact of the stockist in generating demand, the fraction of high-performing stockists associated with the manufacturer and the nature of the relationship between assistance provided and its impact on the stockist’s performance (i.e., complements or substitutes relationship), to attain superior performance. Academic/practical relevance: We parameterize data from Indian firms in the consumer goods industry to understand the observed assistance provided by the manufacturer to the stockist, and associated margins. We then use our model to understand actions taken by a manufacturer in the Indian market. Managerial implications: Our analysis provides a framework for manufacturers to design screening contracts for stockists who play a vital role in managing the fragmented retail markets in developing countries. The online supplement is available at https://doi.org/10.1287/msom.2018.0722 . This paper has been accepted for the Manufacturing & Service Operations Management Special Issue on Value Chain Innovations in Developing Economies.

Nonprofit health care organizations in low- and middle-income countries often pursue a cross-subsidization business model wherein services are offered to poor patients for free through surpluses generated by serving some patients at market prices. This approach allows such organizations to fulfill their mission-oriented and revenue-generation goals. Conventional wisdom holds that mission activities need financial subsidies from revenue-generating activities. The authors examine this dependence in the context of Aravind Eye Hospitals, which delivers eye care services in India. They measure whether the marketing activities (outreach camps) of Aravind that are targeted only to poor patients produce the spillover benefit of attracting paying patients to its hospitals. Using nine years of patient-level historical data, the authors find that camps increase the flow of paying patients. These effects are comparable to the camps acting as advertising for Aravind. Using model estimates, the authors compute the incremental revenue accruing to Aravind from a camp and find that it exceeds the incremental cost of a camp. The findings challenge conventional beliefs about the subsidies required by mission activities.