nep-mkt New Economics Papers
on Marketing
Issue of 2008‒05‒31
twelve papers chosen by
Joao Carlos Correia Leitao
University of the Beira Interior

  1. Sales Growth of New Pharmaceuticals Across the Globe: The Role of Regulatory Regimes By Stremersch, S.; Lemmens, A.
  2. The Determinants of Pricing in Pharmaceuticals: Are U.S. prices really so high? By Antonio Cabrales; Sergi Jiménez-Martín
  3. Enabling Global Price Comparison through Semantic Integration of Web Data By Zhu, Hongwei; Siegel, Michael; Madnick, Stuart
  4. Market Thinness, List Price Revisions and Time to Sell: Evidence from a large-scale housing dataset By Marco Hoeberichts; Maarten van Rooij; Arjen Siegmann
  5. Cooperative Strategies for Improving the Tourism Industry in Remote Geographic Regions: An Addition to Trust and Commitment Theory with one Key Mediating Construct By Pesämaa, Ossi; Hair Jr, Joseph F
  6. Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search By Pollock, Rufus
  7. Can Increases in Real Consumer Incomes Explain the Aging of Motor Vehicles in the US? By Yurko, Anna
  8. A Welfare and Pricing Analysis of Value Added Taxation in Postal Services By CREMER, Helmuth; DE DONDER, Philippe; DUDLEY, Paul; RODRIGUEZ, Frank
  9. From Consumer Incomes to Car Ages: How the Distribution of Income Affects the Distribution of Vehicle Vintages By Yurko, Anna
  10. Consumer support for environmental policies: An application to purchases of green cars By Alex Coad; Peter de Haan; Julia Sophie Woersdorfer
  11. Estrategias de internacionalización productiva de la producción y los distritos del Véneto By Giuseppe Tattara; Giovanna De Giusti; Florentina Constantin
  12. The Effect of Superstar Software on Hardware Sales in System Markets By Binken, J.L.G.; Stremersch, S.

  1. By: Stremersch, S.; Lemmens, A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Prior marketing literature has overlooked the role of regulatory regimes in explaining international sales growth of new products. This paper addresses this gap in the context of new pharmaceuticals (15 new molecules in 34 countries) and sheds light on the effect regulatory regimes have on new drug sales across the globe. Based on a time-varying coefficient model, we find that differences in regulation substantially contribute to cross-country variation in sales. One of the regulatory constraints investigated, i.e. manufacturer price controls, has a positive effect on drug sales. The other forms of regulation such as restrictions of physician prescription budgets and the prohibition of direct-to-consumer advertising tend to hurt sales. The effect of manufacturer price controls is similar for newly launched and mature drugs. In contrast, regulations on physician prescription budget and direct-to-consumer advertising have a differential effect for newly launched and mature drugs. While the former hurts mature drugs more, the latter has a larger effect on newly launched drugs. In addition to these regulatory effects, we find that national culture, economic wealth, introduction timing, lagged sales and competition, also affect drug sales. Our findings may be used as input by managers for international launch and sales decisions. They may also be used by public policy administrators to compare drug sales in their country to other countries and to assess the role of regulatory regimes therein.
    Keywords: international new product growth;drug;pharmaceutical;regulation;culture;economics;timevarying effects;penalized splines
    Date: 2008–05–15
  2. By: Antonio Cabrales; Sergi Jiménez-Martín
    Abstract: This paper studies price determination in pharmaceutical markets using data for 25 countries, six years and a comprehensive list of products from the MIDAS IMS database. A key finding is that the U.S. has prices that are not significantly higher than those of countries with similar income levels, specially those that are "lightly regulated". More importantly, price differences to the US levels increase for "branded" or innovative products, and decrease, regardless of the level of regulation for mature or widely diffused molecules. In addition, the nationality of the producer appears to have a small and often in significant impact on prices. We have constructed a theoretical model that accounts for all these findings simultaneously. One interesting aspect of the model is that it shows that reference pricing confers a degree of protection against government intervention. Thus, there is a sense in which a reference price (or similar) policy in one country becomes a “commitment device to avoid lowering price in another one.
    Date: 2008–05
  3. By: Zhu, Hongwei; Siegel, Michael; Madnick, Stuart
    Abstract: €ܓell Globally€ݠand €ܓhop Globally€ݠhave been seen as a potential benefit of web-enabled electronic business. One important step toward realizing this benefit is to know how things are selling in various parts of the world. A global price comparison service would address this need. But there have not been many such services. In this paper, we use a case study of global price dispersion to illustrate the need and the value of a global price comparison service. Then we identify and discuss several technology challenges, including semantic heterogeneity, in providing a global price comparison service. We propose a mediation architecture to address the semantic heterogeneity problem, and demonstrate the feasibility of the proposed architecture by implementing a prototype that enables global price comparison using data from web sources in several countries.
    Keywords: Global Price Comparison, Shopbots, Context, Semantic Data Integration, Semantic Heterogeneity,
    Date: 2008–01–11
  4. By: Marco Hoeberichts; Maarten van Rooij; Arjen Siegmann
    Abstract: This paper uses a large dataset, covering more than 70% of the Dutch housing market, to analyze the relationship between market thinness, price setting behavior and time to sell. Our findings confirm the typical result that overpricing increases the time on market. In addition, we find evidence of quicker list price reductions suggesting that overpricing is part of a strategy to search for the opportunity of high revenues and to learn about the market. Moreover, we are able to confirm the theory put forward by Lazear (1986) on the relation between atypical goods and the speed of price adjustments. Sellers of atypical houses are more uncertain about the price buyers want to pay and take time to learn about the market, thereby increasing the expected time on market and the time to price revisions. Market liquidity has a positive, i.e. shortening, effect on the time to sale and leads to quicker price revisions due to the increased opportunities for learning.
    Keywords: market liquidity; pricing strategies; marketing time; overpricing; housing
    JEL: R31 D83 D12 C41 E30
    Date: 2008–05
  5. By: Pesämaa, Ossi; Hair Jr, Joseph F
    Abstract: The success of cooperative relationships is influenced by interorganizational commitment, which is a long-run goal of networks. Our research examined cooperative relationships in the tourism industry to better understand what makes them successful. The study is an extension of previous empirical research on commitment. The overall research questions were: ‘‘What factors lead to interorganizational commitment in remote tourismdestinations?’’ and ‘‘What are the relationships between the factors?’’ A literature search was conducted to identify factors related to organizational commitment. Search findings suggested a model proposing that interpersonal commitment mediates the effect of trust and reciprocity on interorganizational commitment. Data for the model was collected from a sample of tourism firms in successful cooperative networks. The theoretical model was purified based on convergent, nomological and discriminant validity as well as construct reliability. Our findings demonstrated that the relationship between trust and interorganizational commitment is in fact mediated by interpersonal commitment. We confirmed that reciprocity is directly related to interorganizational commitment, and is not mediated by interpersonal commitment. Thus, tourism firms should develop cooperative strategies in their networks by focusing on enhancing interpersonal commitment through trust, thereby ultimately helping to strengthen interorganizational commitment.
    Keywords: Interpersonal commitment; interorganizational commitment; trust; reciprocity; tourism; experience stratos
    JEL: C12 M12 C21
    Date: 2008
  6. By: Pollock, Rufus
    Abstract: Internet search (or perhaps more accurately `web-search') has grown exponentially over the last decade at an even more rapid rate than the Internet itself. Starting from nothing in the 1990s, today search is a multi-billion dollar business. Search engine providers such as Google and Yahoo! have become household names, and the use of a search engine, like use of the Web, is now a part of everyday life. The rapid growth of online search and its growing centrality to the ecology of the Internet raise a variety of questions for economists to answer. Why is the search engine market so concentrated and will it evolve towards monopoly? What are the implications of this concentration for different `participants' (consumers, search engines, advertisers)? Does the fact that search engines act as `information gatekeepers', determining, in effect, what can be found on the web, mean that search deserves particularly close attention from policy-makers? This paper supplies empirical and theoretical material with which to examine many of these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the possible regulatory interventions that policy-makers could utilize to address these.
    Keywords: Search Engine; Regulation; Competition; Antitrust; Technology
    JEL: L10 L50 L40
    Date: 2008–05
  7. By: Yurko, Anna
    Abstract: The average age of vehicles in the US has increased by more than 40 percent since the early 1960s. Over the same time period, consumer incomes on average have been growing faster than prices of new vehicles. This paper asks whether greater affordability of vehicles and the resulting increase in vehicle ownership among lower-income consumers can explain some of the aging of vehicles in the US. Consumers with lower incomes are more likely to purchase used vehicles and hold on to them longer, so their decisions affect the age composition of the vehicle population. I evaluate this hypothesis using a dynamic, non-stationary, heterogeneous agents model, with consumer incomes and prices of new vehicles growing over time at the rates calibrated from the data. The agents in the model buy and sell both new and used vehicles. These vehicles are differentiated by age-dependent quality (high, medium and low), with the assumption that older vehicles are more likely to be of poorer quality. The prices of used vehicles depend on their quality level and are allowed to change over time at endogenous rates. The estimated model predicts a significant increase in the average age of vehicles from 1967 to 2001. The conclusion is that consumer incomes are an important factor in vehicle ownership decisions, including the ages of vehicles held, and changes in incomes have contributed to the aging of the vehicle stock in the US.
    Keywords: motor vehicles; heterogeneous agents models; intertemporal consumer choice; discrete choice
    JEL: D11 D91 E21
    Date: 2008–05
  8. By: CREMER, Helmuth; DE DONDER, Philippe; DUDLEY, Paul; RODRIGUEZ, Frank
    Date: 2008–03
  9. By: Yurko, Anna
    Abstract: This paper studies the relationship between consumer incomes and ages of the durable goods consumed. At the household level, it presents evidence from the Consumer Expenditure Survey of a negative correlation between incomes and ages of the vehicles owned. At the aggregate level, it constructs a dynamic, heterogeneous agents, discrete choice model, to study the relationship between the distribution of consumer incomes and the distribution of vehicle vintages. The model's parameters are calibrated to match vehicle ownership data for 2001. The moments of the income distribution are then varied to generate predictions for mean and median ages of vehicles. The model predicts that higher levels of income inequality lead to older vehicle stocks. If the initial incomes are low, increasing mean income may lead to the aging of vehicles by encouraging entry of lower income consumers into vehicle ownership via purchases of older vehicles. Beyond a certain income level, however, economies with higher mean incomes have younger vehicle stocks.
    Keywords: income distribution; motor vehicles; heterogeneous agents models; intertemporal consumer choice; discrete choice
    JEL: D12 D91 E21
    Date: 2008–05
  10. By: Alex Coad (Max Planck Institute of Economics, Evolutionary Economics Group); Peter de Haan (ETH Zurich, Institute for Environmental Decisions); Julia Sophie Woersdorfer (Max Planck Institute of Economics, Evolutionary Economics Group)
    Abstract: This paper focuses on how consumer motivation can be tapped in order to encourage the adoption of cleaner technologies. Consumers are heterogeneous they may be guided by intrinsic motivation or extrinsic motivation. While information provision policies (such as the energy label for cars) may be effective in encouraging certain consumers to adopt green cars, financial incentive schemes (such as subsidies or fines) may be more persuasive for extrinsically-motivated consumers. We develop a dynamic theory of adoption of environmental innovations, in which information-provision policies are followed by financial incentives (first 'carrot', then 'stick' incentives). Analysis of a survey dataset of Swiss households observes considerable heterogeneity in terms of support of information- provision or financial incentive policies, in line with our conjectures. Our results will be of particular interest to policymakers interested in guiding consumers towards cleaner technologies.
    Keywords: Environmental policy, Technology adoption, Technology diffusion, Intrinsic motivation, Financial incentives.
    JEL: Q53 Q57 O33
    Date: 2008–05–06
  11. By: Giuseppe Tattara (Department of Economics, University Of Venice Cà Foscari); Giovanna De Giusti (Reading, dottorato in scienze sociali); Florentina Constantin (Varsavia,dottorato in scienze sociali)
    Abstract: Los procesos de deslocalización al extranjero de partes del proceso productivo en la industria del calzado están motivados por la búsqueda de la reducción del coste del trabajo. Las empresas del mueble se han internacionalizado para realizar un control sobre la adquisición de su materia prima, la madera. Las empresas de la refrigeración, en su avance hacia el Este, miran al mercado rumano por su potencialidad de venta, y desde éste a otros mercados. El presente trabajo retoma una serie de investigaciones basadas en el análisis de una treintena de empresas, teniendo por objeto analizar el grado de interacción entre las empresas italianas y las rumanas a lo largo de la cadena de producción, así como valorar los principales cambios sucedidos en la gestión de las cadenas globales del valor. Se dará cuenta de las discusiones acerca de los cambios en la organización de los procesos productivos y la gestión de las relaciones entre las empresas en las diversas fases de la cadena de producción. Por fin, sobre la base de estas experiancias se criticará a la teoria de las cadenas del valor propuesta por Gereffi, Humphrey y Sturgeon.
    Keywords: production organization, global value chains, fragmentation, internationalization, footwear, furniture, refrigeration industry Italy
    Date: 2007
  12. By: Binken, J.L.G.; Stremersch, S. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Systems are composed of complementary products (e.g., video game systems are composed of the video game console and video games). Prior literature on indirect network effects argues that, in system markets, sales of the primary product (often referred to as “hardwareâ€) largely depend on the availability of complementary products (often referred to as “softwareâ€). Mathematical and empirical analyses have almost exclusively operationalized software availability as software quantity. However, while not substantiated with empirical evidence, case illustrations show that certain “superstar†software titles of very high quality (e.g., Super Mario 64) may have had disproportionately large effects on hardware unit sales (e.g., Nintendo N64 console sales). In the context of the U.S. home video game console market, we show that the introduction of a superstar increases video game console sales on average by 14%, over a period of 5 months. Software type does not consistently alter this effect. Our findings imply that scholars who study the relationship between software availability and hardware sales, need to account for superstar returns, and their decaying effect over time, over and above a mere software quantity effect. Hardware firms should maintain a steady flow of superstar introductions, as the positive effect of a superstar only lasts for 5 months, and make, if need be, side-payments to software firms, as superstars dramatically increase hardware sales. Obtaining exclusivity over superstars, by hardware firms, does not provide an extra boost to their own sales, but it does take away an opportunity for competing systems to increase their sales.
    Keywords: system markets;superstars;indirect network effects;new product introductions;software;hardware;video game industry
    Date: 2008–05–15

This nep-mkt issue is ©2008 by Joao Carlos Correia Leitao. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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