David F. Drake
Assistant Professor of Business Administration
David Drake is an assistant professor in the Technology & Operations Management (TOM) Unit where he teaches the TOM course in the MBA required curriculum and an elective course in Operations Strategy. Professor Drake's current research focuses on sustainable operations and, in particular, on clean technology adoption. Specifically, his work focuses on how emissions regulation can impact the capacity portfolios that firms invest in; how such regulation, when unilaterally imposed, impacts technology choice, facility location, and regional competitiveness; and how creative collaboration can improve the economic feasibility of clean technologies among logistics providers. Professor Drake has also authored pedagogical cases focusing on technology choice under emissions regulation and closed-loop supply chains (product take-back). Through his research, Professor Drake has worked closely with a number of firms experiencing emission regulation under the EU-ETS, and attended the Copenhagen Climate Change Conference (UN COP15) as a delegate.
After earning his MBA in operations management from Vanderbilt University’s Owen Graduate School of Management, Professor Drake spent five years at Random House where he led the publishing operations projects and the production purchasing groups. He then earned his MSc and PhD in management from INSEAD.
Sustainable Operations Management: An Enduring Stream, or Passing Fancy?
Paul Kleindorfer was among the first to weigh-in on and help nurture the stream of Sustainable Operations Management. The thoughts laid out here are based on conversations that we had with Paul relating to the foundational drivers underlying Sustainability as a management issue—population and per capita consumption growth; the limited nature of resources and sinks; and the responsibility and exposure of firms to ensuing ecological risks and costs. We then discuss what an Operations Management lens brings to the issue, briefly reviewing current and ongoing research in the field. This article relates to a presentation prepared by Paul and delivered by Morris Cohen for Paul's Manufacturing & Service Operations Management Distinguished Fellows Award given at Columbia University, June 18, 2012. We undertook the writing of this article at Paul's request.
Keywords: Sustainable Operations;
Carbon Tariffs: Effects in Settings with Technology Choice and Foreign Comparative Advantage
Carbon regulation is intended to reduce global emissions, but there is growing concern that such regulation may simply shift production to unregulated regions and increase global emissions in the process. Carbon tariffs have emerged as a possible mechanism to address these concerns by imposing carbon costs on imports at the regulated region's border. I show that, when firms choose from discrete production technologies and offshore producers hold a comparative cost advantage, carbon leakage can result despite the implementation of a carbon tariff. In such a setting, foreign firms adopt clean technology at a lower emissions price than firms operating in the regulated region, with foreign entry increasing only over emissions price intervals within which foreign firms hold this technology advantage. Further, domestic firms are shown to conditionally offshore production despite the implementation of a carbon tariff, adopting cleaner technology when they do so. As a consequence, when carbon leakage does occur under a carbon tariff, it conditionally decreases global emissions. Three sources of potential welfare improvement realized through carbon tariffs require both foreign comparative advantage and endogenous technology choice, underscoring the importance of considering both in value assessments of such a policy.
Technology Choice and Capacity Portfolios Under Emissions Regulation
We study the impact of emissions tax and emissions cap-and-trade regulation on a firm's long-run technology choice and capacity decisions. We study the problem through a two-stage, stochastic model where the firm chooses capacities in two technologies in stage one, demand uncertainty resolves between stages (as does emissions price uncertainty under cap-and-trade), and then the firm chooses production quantities. As such, we bridge the discrete choice capacity literature in Operations Management (OM) with the emissions-related sustainability literature in OM and Economics. Among our results, we show that a firm's expected profits are greater under cap-and-trade than under an emissions tax due to the option value embedded in the firm's production decision, which contradicts popular arguments that the greater uncertainty under cap-and-trade will erode value. We also show that improvements to the emissions intensity of the "dirty" type can increase the emissions intensity of the firm's optimal capacity portfolio. Through a numerical experiment grounded in the cement industry, we find emissions to be less under cap-and-trade, with technology choice driving the vast majority of the difference.
Keywords: Pollution and Pollutants;
Governing Rules, Regulations, and Reforms;
Observation Bias: The Impact of Demand Censoring on Newsvendor Level and Adjustment Behavior
In an experimental newsvendor setting we investigate three phenomena: Level behavior — the decision-maker's average ordering tendency; adjustment behavior — the tendency to adjust period-to-period order quantities; and observation bias — the tendency to let the degree of demand feedback influence order quantities. We find that the portion of mismatch cost due to adjustment behavior exceeds the portion of mismatch cost due to level behavior in three out of four conditions. Observation bias is studied through censored demand feedback, a situation which arguably represents the majority of newsvendor settings. When demands are uncensored, subjects tend to order below the normative quantity when facing high margin and above the normative quantity when facing low margin, but in neither case beyond mean demand (a.k.a. the pull-to-center effect). Censoring in general leads to lower quantities, magnifying the below-normative level behavior when facing high margin but partially counterbalancing the above-normative level behavior when facing low margin, violating the pull-to-center effect in both cases.
Prejudice and Bias;
HeidelbergCement: Technology Choice Under Carbon Regulation
Governing Rules, Regulations, and Reforms;
Industrial Products Industry;
Drake, David F., Paul R. Kleindorfer, and Luk N. Van Wassenhove. "HeidelbergCement: Technology Choice Under Carbon Regulation." European Case Clearing House Case, 2010.
Ludo (A): Ludo Press and the Newsvendor Problem
Keywords: Problems and Challenges;
Drake, David F., and Nils Rudi. "Ludo (A): Ludo Press and the Newsvendor Problem." Institut Européen d'Administration des Affaires (INSEAD) Case, 2009. (Working Case.)
Cycleon (A): Postal Networks for Reverse Logistics.
Drake, David F., Atalay Atasu, and Luk N. Van Wassenhove. "Cycleon (A): Postal Networks for Reverse Logistics." European Case Clearing House Case, 2008.
Cycleon (A): Postal Networks for Reverse Logistics
Drake, David F., Atalay Atasu, and Luk N. Van Wassenhove. "Cycleon (A): Postal Networks for Reverse Logistics." 2008. (Teaching Note.)