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on Marketing |
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Issue of 2007‒09‒02
five papers chosen by Joao Carlos Correia Leitao University of the Beira Interior |
| By: | Oksana Loginova (Department of Economics, University of Missouri-Columbia) |
| Abstract: | Although the Internet reduces market frictions by making it easier for consumers to obtain information about prices and product offerings, goods sold by electronic firms are not perfect substitutes for otherwise identical goods sold by conventional stores. Online purchases, due to non-zero shipping time, are associated with waiting costs, and they do not allow consumers to inspect the product prior to purchase. Visiting a conventional store, on the other hand, involves positive travelling costs. A model extending the circular city paradigm with two types of firms, conventional and electronic, is studied. Under the benchmark setting with only conventional firms in the market, each consumer visits the nearest store and purchases the product there. When electronic firms enter the market, an intriguing type of market segmentation may arise. First, each consumer travels to the nearest conventional store to "try on" the product. Second, conventional retailers increase their prices and sell the good only to consumers who discover that they have high valuations; consumers with low valuations return "home" and order the good online. In spite of the increased competition from Internet retailers, welfare decreases. |
| Keywords: | Electronic Commerce, Oligopoly Pricing, Market Segmentation, Spatial Competition. |
| JEL: | D43 D81 L11 |
| Date: | 2007–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:umc:wpaper:0715&r=mkt |
| By: | Andrea Galeotti; Sanjeev Goyal |
| Abstract: | The important role of friends, neighbors and colleagues in shaping individual choices has been brought out in a number of studies over the years. The presence of significant 'local' influence in shaping individual behavior suggests that firms, governments and developmental agencies should explicitly incorporate it in the design of their marketing and developmental strategies. This paper develops a framework for the study of optimal strategies in the presence of social interaction. We focus on the case of a single player who exerts costly effort to get a set of individuals – engaged in social interaction – to choose a certain action. Our formulation allows for different types of social interaction and also allows for the player to have incomplete information concerning the connections among individuals. We first show that incorporating information on social interaction can have large effects on the profits of a player. Then, we establish that an increase in the level and dispersion of social interaction can raise or lower the optimal strategy and profits of the player, depending on the content of the interaction. Finally, we study the value of social network information for the player and find that it depends on the dispersion in social connections. The economic interest of these results is illustrated via a discussion of two economic applications: advertising in the presence of word of mouth communication and seeding a network. |
| Date: | 2007–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:esx:essedp:635&r=mkt |
| By: | I. VERMEIR; P. VAN KENHOVE |
| Abstract: | The purpose of the present study is to investigate gender differences in the use of double standards in ethical judgements of questionable conduct instigated by business or consumers. We investigate if consumers are more critical towards unethical corporate versus consumer actions and if these double standards depend on the gender of the respondent. In the first study, we compared evaluations of four specific unethical actions (cfr. DePaulo, 1987) instigated by either the consumer or the corporation. In a second study, we investigated the perception of some general consumer and corporate (un)ethical actions in addition to DePaulo’s unethical scenarios. Both researches show that females use less double standards when it comes to their own (un)ethical behaviour compared to corporate (un)ethical actions. Furthermore, gender differences in the use of double standards depend on the type of unethical behaviour. Limitations and suggestions for further research are discussed. |
| Keywords: | Consumer ethics; double standards; gender; ethical evaluations; ethical beliefs |
| Date: | 2007–06 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:07/467&r=mkt |
| By: | Gary E Bolton; Claudia Loebbecke; Axel Ockenfels |
| Abstract: | Many Internet markets rely on ‘feedback systems’, essentially social networks of reputation, to facilitate trust and trustworthiness in anonymous transactions. Market competition creates incentives that arguably may enhance or curb the effectiveness of these systems. We investigate how different forms of market competition and social reputation networks interact in a series of laboratory online markets, where sellers face a moral hazard. We find that competition in strangers networks (where market encounters are one-shot) most frequently enhances trust and trustworthiness, and always increases total gains-from-trade. One reason is that information about reputation trumps pricing in the sense that traders usually do not conduct business with someone having a bad reputation not even for a substantial price discount. We also find that a reliable reputation network can largely reduce the advantage of partners networks (where a buyer and a seller can maintain repeated exchange with each other) in promoting trust and trustworthiness if the market is sufficiently competitive. We conclude that, overall, competitive online markets have more effective social reputation networks. |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0032&r=mkt |
| By: | Gary E Bolton; Axel Ockenfels |
| Abstract: | We conducted a controlled field experiment on eBay and examined to what extent both social and competitive laboratory behavior is robust to institutionally complex real world markets with experienced traders, who selected themselves into these markets. EBay’s natural trading system provides bridges between lab and field environment that can be exploited to explore differences in behavior in the two environments. We find that many sellers do not make use of their commitment power as predicted by standard theories of both selfish and social behavior. However, a concern for equity strongly affects outcomes and reputation building in bilateral bargaining, while buyer competition effectively masks this concern and robustly yields equilibrium outcomes. The dichotomy of behaviors mirrors observations in laboratory research. Furthermore, we find that behavioral patterns in the field experiment mirror fully naturally occurring trading patterns in the market. |
| Date: | 2007–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:kls:series:0036&r=mkt |