nep-mkt New Economics Papers
on Marketing
Issue of 2008‒01‒05
nine papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Long Tail or Steep Tail? A Field Investigation into How Online Popularity Information Affects the Distribution of Customer Choices By Tucker, Catherine; Zhang, Juanjuan
  2. CURRY CUISINE: PERCEPTIONS OF INDIAN RESTAURANTS IN MALAYSIA By Bharath , Josiam; Sadiq , Sohail; Prema , Monteiro
  3. The Elusive Antitrust Standard on Bundling in Europe and in the United States at the Aftermath of the Microsoft Cases By Nicholas Economides; Ioannis Lianos
  4. Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications By Lence, Sergio H.; Marette, Stephan; Hayes, Dermot J.; Foster, William
  5. Hawks and doves in segmented markets : a formal approach to competitive aggressiveness By Claude, DASPREMONT; Rodolphe, DOS SANTOS FERREIRA; Jacques, THEPOT
  6. Customer & Employee Satisfaction in the Health Service Sector: Analysis and Measurement Methodologies By Francesca De Battisti; Laura Iacovone; Giovanna Nicolini
  7. Persuasion as a Contest By Stergios Skaperdas; Samarth Vaidya
  8. Estimating Demand for Cellular Phone Service under Nonlinear Pricing By Huang, Ching-I
  9. The “Competitive” Value of Music to Commercial Radio Stations By Paul Audley; Marcel Boyer

  1. By: Tucker, Catherine; Zhang, Juanjuan
    Abstract: The internet has made it easier for customers to find and buy a wide variety of products. This may lead to a "long tail" effect as more customers buy low-volume products. However, the internet has also made it easier for customers to find out which products are most popular. This could lead to a "steep tail" effect as customers flock towards the most popular products. Using data from a field experiment with a website that lists wedding service vendors, we find empirical evidence that a steep tail exists. The most popular vendors become more popular when customers can easily observe previous customers' click-through behavior. Then, we ask whether this steep tail effect "complements" the long tail, by attracting customers who would otherwise have chosen nothing, or "competes with" the long tail, by shifting customers from less popular vendors to popular ones. We find evidence of a complementary effect, where the steep tail indicates new interest in the most popular vendors from outside, with negligible cannibalization of interest for less popular vendors. The findings suggest that popularity information can serve as a powerful marketing tool that facilitates product category growth. They also explain the prevalence of firm practices to highlight bestsellers.
    Keywords: Long Tail, Steep Tail, Customer Learning, Decisions Under Uncertainty, Internet Marketing, Category Management,
    Date: 2007–12–07
  2. By: Bharath , Josiam; Sadiq , Sohail; Prema , Monteiro
    Abstract: Malaysia is an Asian country with a multi-ethnic population that includes native Malays, and people of Chinese and Indian ethnicity. Malaysia has identified tourism as a priority sector and is aggressively promoting the country. Consequently, restaurants in Malaysia operate with an increasingly more ethnically diverse customer base. Ethnic restaurants and differential perceptions of customers of varying ethnic backgrounds have not been studied in detail. This study examines the perceptions of South Asians, Caucasians, East Asians, and those of other ethnic origins in their perceptions of Indian restaurants in Malaysia. The findings suggest that there are universal likes/dislikes as well as differential perceptions between ethnic groups. Implications for restaurant operators and researchers are suggested.
    Keywords: ethnic marketing, Indian restaurants, spicy food, customer perceptions, Malaysia
    JEL: M0 M3 M1 L83
    Date: 2007–11
  3. By: Nicholas Economides (Stern School of Business, New York University); Ioannis Lianos (University College London, Faculty of Laws)
    Abstract: We analyze and contrast the US and EU antitrust standards on mixed bundling and tying. We apply our analysis to the US and EU cases against Microsoft on the issue of tying new products (Internet Explorer in the US, and Windows Media Player in the EU) with Windows as well as to cases brought in Europe and in the United States on bundling discounts. We conclude that there are differences between the EC and US antitrust law on the choice of the relevant analogy for bundled rebates (predatory price standard or foreclosure standard) and the implementation of the distinct product and coercion test for tying practices. The second important difference between the two jurisdictions concerns the interpretation of the requirement of anticompetitive foreclosure. It seems to us that in Europe, consumer detriment is found easily and it is not always a requirement for the application of Article 82, or at least that the standard of proof of a consumer detriment for tying cases is lower than in the US.
    Keywords: tying, bundling, foreclosure, requirement contracts, monopolization, Microsoft, predatory pricing
    JEL: K12 L12 L13 L41 L42 L63
    Date: 2007–12
  4. By: Lence, Sergio H.; Marette, Stephan; Hayes, Dermot J.; Foster, William
    Abstract: We examine the incentives of atomistic producers to differentiate and collectively market products. We analyze market and welfare effects of alternative producer organizations, discuss circumstances under which they will evolve, and describe implications for the ongoing debate between the EU and the United States. As fixed costs of development and marketing increase and the anticipated market size falls, it becomes essential to increase the producer organization's ability to control supply to cover the fixed costs associated with the introduction of differentiated products. Counterintuitively, stronger property right protection for producer organizations may enhance welfare even after a differentiated product has been developed.
    Keywords: agricultural products, collective promotion, geographic indications, supply control, quality
    JEL: Q1
    Date: 2007–03–20
    Abstract: Competitive aggressiveness is analyzed in a simple spatial oligopolistic competition model, where each one of two firms supplies two connected markets segments, one captive the other contested. To begin with, firms are simply assumed to maximize profit subject to two constraints, one related to competitiveness, the other to market feasibility. The competitive aggressiveness of each firm, measured by the relative implicit price of the former constraint, is then endogenous and may be taken as a parameter to characterize the set of equilibria. A further step consists in supposing that competitive aggressiveness is controlled by each firm through its manager hiring decision, in a preliminary stage of a delegation game. When competition is exogenously intensified, through higher product substitutability or through larger relative size of the contested market segment, competitive aggressiveness is decreased at the subgame perfect equiibrium. This decrease partially compensates for the negative effect on profitability of more intense competition
    Date: 2007–12–06
  6. By: Francesca De Battisti; Laura Iacovone; Giovanna Nicolini (Department of Economics, Business and Statistics)
    Abstract: In order measure the competitiveness of a local Health Service organisation it is necessary to analyse not only internal performance levels but also the perceived quality of the services provided and the level of customer satisfaction attained; this is directly linked to the management aspects of the Healthcare provider. Therefore we suggest performing a comparison between the external and internal 'image' of the structure. In addition, having specified a global subjective measure of satisfaction, we will perform a comparison between customer and employee satisfaction. We will illustrate the results of a survey, carried out on two subject samples (customers and employees of the Healthcare provider in question) to which two different types of questionnaire, similar for some items, are provided.
    Keywords: Customer Satisfaction, Employee Satisfaction, External Image, Internal Image,
    Date: 2007–07–20
  7. By: Stergios Skaperdas (Department of Economics, University of California-Irvine); Samarth Vaidya (School of Accounting, Economics, and Finance, Faculty of Business and Law, Deakin University)
    Abstract: From marketing and advertising to political campaigning and court proceedings, contending parties expend resources to persuade an audience of the correctness of their view. We examine how the probability of persuading the audience depends on the resources expended by the parties, so that persuasion can be modelled as a contest. We use a Bayesian approach whereby the audience makes inferences solely based on the evidence presented to them. The evidence is produced by the resources expended by the contending parties. We find conditions on evidence production and likelihood functions that yield the well-known additive contest success functions, including the logit function as well as the one used in all-pay auctions. We also find conditions that produce a "difference" functional form. In all cases, there are three main determinants of which side the audience chooses: (i) the truth and other objective parameters of the environment; (ii) the biases of the audience as distilled in their priors and the likelihood function employed; and (iii) the resources expended by the parties interested in persuading the audience.
    Keywords: Rent-seeking; Advertising; Litigation; Political campaigning; Property rights
    JEL: C70 D20 D70
    Date: 2007–12
  8. By: Huang, Ching-I
    Abstract: Cellular phone carriers typically offer complicated nonlinear tariffs. Consumers make a discrete choice among several rate plans. Each plan has a nonlinear price schedule, and price is usually lower for in-network calls. I present an empirical framework to estimate demand under such nonlinear pricing schemes by using parsimonious data and apply the estimation method to analyze the cellular phone service market in Taiwan. Based on the estimated model, I evaluate the impacts of termination-based pricing schemes on the market structure. While the existence of in-network discounts causes considerable tipping effects on market shares, the effects come primarily from reducing the average prices, not from the difference between in-network and off-network prices. There is no evidence showing that termination-based pricing by itself has significant effects on market structure.
    Keywords: termination-based price discrimination; optional rate plans; cellular phone service; structural estimation
    JEL: L96 L11 C35 L15
    Date: 2007–10
  9. By: Paul Audley; Marcel Boyer
    Abstract: Our objective in this paper is to develop a methodology to infer from the behaviour and choices of broadcasters the “competitive” value they attach to the use of music, more precisely sound recordings, and to derive from such an inferred value the proper “competitive” copyright payments to be made to authors, composers, performers, and makers of sound recordings. We illustrate the methodology by applying it to Canadian data. The background is provided by the statement of case and supporting proof presented in the 2004 proceedings before the Copyright Board of Canada on the commercial radio tariff. The results called for a significant increase in copyright payments by Canada’s commercial radio industry: the proper competitive copyright payments should be substantially more than double what the industry was paying at the time of the hearings. <P>Nous proposons dans cet article une méthode permettant d’inférer, du comportement et des choix des diffuseurs, la valeur « concurrentielle » qu’ils accordent à la musique enregistrée et d’obtenir de cette valeur inférée les montants qu’ils devraient verser aux auteurs, compositeurs, interprètes et producteurs au chapitre des droits d’auteur. Nous appliquons la méthode sur des données canadiennes. Le cadre institutionnel de référence nous est fourni par la cause de 2004 devant la Commission du droit d’auteur du Canada relative au tarif applicable à la radio commerciale. Nos résultats montrent qu’une hausse substantielle des paiements pour droits d’auteur s’impose : ces paiements « concurrentiels » devraient être plus du double de ceux que l’industrie versait effectivement au moment des audiences de la cause.
    Keywords: copyright valuation, Commercial radio, évaluation des droits d’auteur, radio commerciale
    Date: 2007–12–01

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