nep-mkt New Economics Papers
on Marketing
Issue of 2007‒01‒02
eight papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior

  1. Regulating Misinformation By Edward L. Glaeser; Gergely Ujhelyi
  2. Online Auctions By Axel Ockenfels; David Reiley; Abdolkarim Sadrieh
  3. Market structure and credit card pricing: what drives the interchange? By Zhu Wang
  4. Structural Shift in Demand for Food: Projections for 2020 By Surabhi Mittal
  5. Internet y sus aplicaciones al sector turístico By Matilde Alonso; Elies Furio Blasco
  6. How small is zero price? : the true value of free products By Kristina Shampan'er; Dan Ariely
  7. Academic Journals as Two-Sided Platforms: Empirical Evidence from Data on French Libraries By Dubois, Pierre; Hernandez-Perez, Adriana; Ivaldi, Marc
  8. Pricing and welfare implications of payment card network competition By Fumiko Hayashi

  1. By: Edward L. Glaeser; Gergely Ujhelyi
    Abstract: The government has responded to misleading advertising by banning it, engaging in counter-advertising and taxing the product. In this paper, we consider the social welfare effects of those different responses to misinformation. While misinformation lowers consumer surplus, its effect on social welfare is ambiguous. Misleading advertising leads to overconsumption but that may be offsetting the under-consumption associated with monopoly prices. If all advertising is misinformation then a tax or quantity restriction on advertising maximizes social welfare. Other policy interventions are inferior and cannot improve on a pure advertising tax. If it is impossible to tax misleading information without also taxing utility increasing advertising, then combining taxes or bans on advertising with other policies can increase welfare.
    JEL: A1
    Date: 2006–12
  2. By: Axel Ockenfels; David Reiley; Abdolkarim Sadrieh
    Abstract: The economic literature on online auctions is rapidly growing because of the enormous amount of freely available field data. Moreover, numerous innovations in auction-design features on platforms such as eBay have created excellent research opportunities. In this article, we survey the theoretical, empirical, and experimental research on bidder strategies (including the timing of bids and winner's-curse effects) and seller strategies (including reserve-price policies and the use of buy-now options) in online auctions, as well as some of the literature dealing with online-auction design (including stopping rules and multi-object pricing rules).
    JEL: D44
    Date: 2006–12
  3. By: Zhu Wang
    Abstract: This paper presents a model for the credit card industry, where oligopolistic card networks price their products in a complex marketplace with competing payment instruments, rational consumers/merchants, and competitive card issuers/acquirers. The analysis suggests that card networks demand higher interchange fees to maximize card issuers' profits as card payments become more efficient. At equilibrium, consumer rewards and card transaction volume also increase, while consumer surplus and merchant profits may not. The model provides a unified framework to evaluate credit card industry performance and government interventions.
    Date: 2006
  4. By: Surabhi Mittal (Indian Council for Research on International Economic Relations)
    Abstract: Knowledge of demand structure and consumer behaviour is essential for a wide range of development policy questions like improvement in nutritional status, food subsidy, sectoral and macroeconomic policy analysis, etc. An analysis of food consumption patterns and how they are likely to shift with changes in income and relative price is required to assess the food security-related policy issues in the agricultural sector. With high growth rates in the agricultural sector, the average per capita income in the country shows an increase, accompanied by a fall in the per capita consumption of staple food. In this background the present study diagnoses the food basket of households in rural and urban areas under different expenditure groups in the last two decades and tries to investigate the driving force for these changes by computing the demand elasticities that explain the level of demand for the commodities by an individual consumer given the structure of relative prices faced, real income and a set of individual characteristics such as age, type of household [expenditure groups] and geographical environment [rural or urban]. The study projects the prospects of the food demand scenario in the country in 2020. And, finally, aims at finding answers to some of the most debatable issues relating to the country's food security, decline in cereal consumption and implications on poverty. The study uses data from the consumer expenditure survey of the National Sample Survey [NSS] rounds number 38, 43, 50 and 55
    Keywords: Household Food Consumption, Demand Elasticity, Decomposition, Demand Projections, Quadratic AIDS Model
    JEL: Q11 Q18
    Date: 2006–08
  5. By: Matilde Alonso (ECONOMIA, TREBALL I TERRITORI - Economia Aplicada - Grup d'Investigació Nº 19 - [Universitat de Valencia]); Elies Furio Blasco (ECONOMIA, TREBALL I TERRITORI - Economia Aplicada - Grup d'Investigació Nº 19 - [Universitat de Valencia])
    Abstract: El objetivo de este trabajo es analizar las aplicaciones que Internet tiene en el sector turístico. Para su desarrollo se ha partido de una serie de cuestiones. En primer lugar, qué es Internet y cuáles son sus aplicaciones y sus implicaciones para la actividad económica y el mundo de la empresa. En segundo lugar, se ha pasado a ver sus aplicaciones al sector turísticos, las cuales se estudian tanto desde la perspectiva de los servicios de Internet como desde el punto de vista de las aplicaciones que Internet ofrece a los actores que participan en el negocio turístico. Desde el primer punto de vista, destaca el análisis de los portales turísticos o de Internet y la TV interactiva. Desde la perspectiva de los actores, cabe destacar el análisis relativo a las cadenas hoteleras, las compañías aéreas y las agencias de viajes.
    Keywords: Internet; Turismo
    Date: 2006–12–24
  6. By: Kristina Shampan'er; Dan Ariely
    Abstract: When faced with a choice of selecting one of several available products (or possibly buying nothing), a standard theoretical perspective suggests that the option with the highest benefitcost difference will be chosen. This analysis applies to all prices including the price of zero. In contrast, we propose that decisions about free products are different than simply subtracting costs from benefits, and that in fact the benefits associated with free products are perceived to be higher. We test this idea by contrasting the demands for two products (types of chocolate) across conditions that maintain the cost-benefit difference for the goods, but vary on whether the price of the cheaper good in the set is priced at a low positive price or at zero. Contrary to a standard cost -benefit perspective, the results show that, in the zero-price condition, the proportion of participants choosing the less attractive chocolate dramatically increases, while the proportion of participants choosing the more attractive chocolate dramatically decreases. Thus, individuals seem to act as if pricing a good as free not only decreases its cost, but also adds to its benefits. After documenting this basic effect, we propose and test several possible psychological antecedents of the effect: Social norms, Mapping difficulty, and Affect. The results suggest Affect as the most likely source of the effect.
    Keywords: Pricing
    Date: 2006
  7. By: Dubois, Pierre; Hernandez-Perez, Adriana; Ivaldi, Marc
    Abstract: This paper analyzes the demand and cost structure of the French market of academic journals, taking into account its intermediary role between researchers, who are both producers and consumers of knowledge. This two sidedness feature will echoes similar problems already observed in electronic markets - payment card systems, video game consoles, etc. - such as the chicken and egg problem, where readers won’t buy a journal if they do not expect its articles to be academically relevant and researchers, that live under the mantra 'Publish or Perish', will not submit to a journal with either limited public reach or weak reputation. After the merging of several databases, we estimate the aggregated nested logit demand system combined simultaneously with a cost function. We identify the structural parameters of this market and find that price elasticities of demand are quite large and margins relatively low, indicating that this industry experiences competitive constraints.
    Keywords: differentiated products models; media industry; two-sided platforms
    JEL: L11 L82
    Date: 2006–12
  8. By: Fumiko Hayashi
    Abstract: This paper examines how competition among payment card networks—three-party scheme networks and four-party scheme networks—affects pricing as well as the welfare of various parties. A competing network has an incentive to provide rewards to its card users. By providing more generous rewards than its rival networks, the network can increase its own card transactions because multihoming cardholders—who hold multiple networks’ cards—choose to use its card instead of using its rivals’. Although a monopoly network does not have such an incentive, in a monopoly four-party scheme network, competition among card issuers likely makes issuers provide rewards. Due to rewards, the merchant fees under competition can be higher than the merchant fees set by a monopoly network, unless the majority of cardholders are multihoming. Generally, cardholding consumers are better off under network competition. In contrast, non-cardholding consumers are better off only when network competition reduces merchant fees lower than those under monopoly. The results suggest that policies that simply encourage network competition will likely increase cardholder rewards but will not necessarily lower merchant fees in the U.S. payment card market. Several empirical indicators may possibly tell which direction the U.S. payments system needs to go.
    Date: 2006

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