nep-mkt New Economics Papers
on Marketing
Issue of 2008‒09‒20
five papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Sports Business and the Theory of Multisided Markets By Oliver Budzinski; Janina Satzer
  2. On the Complexity of the Highway Pricing Problem By Grigoriev Alexander; Loon Joyce van; Uetz Marc
  3. Outflow Dynamics in Modeling Oligopoly Markets: The Case of the Mobile Telecommunications Market in Poland By Sznajd-Weron, Katarzyna; Weron, Rafal; Wloszczowska, Maja
  4. Revenues in Discrete Multi-Unit, Common Value Auctions: A Study of Three Sealed-Bid Mechanisms By Ahlberg, Joakim
  5. Satisficing and prior-free optimality in price competition: a theoretical and experimental analysis By Werner Güth; M. Vittoria Levatia; Matteo Ploner

  1. By: Oliver Budzinski (Faculty of Business Administration and Economics, Philipps Universitaet Marburg); Janina Satzer (Faculty of Business Administration and Economics, Philipps Universitaet Marburg)
    Abstract: Despite still being younger than a decade, the theory of multisided market has offered numerous valuable insights for the analysis of non-ordinary industries in which a supplier serves two distinct customer groups that are indirectly interrelated by externalities. Examples include payment systems, matching agencies, commercial media and software platforms. However, professional sports markets have largely been neglected so far in this kind of research although they possess the characteristics of multisided markets. We contribute to filling this gap by describing the platform elements of professional suppliers of sports events and outlining problems where an application of this theoretical framework is likely to provide valuable insights and to add to the existing knowledge. Among these problems are integrative pricing strategies of sports clubs towards such different customer groups like attendees, broadcasters, sponsors, etc., including their welfare and antitrust implications, design decisions of sports associations in order to promote positive feedback loops among the customer groups as well as strategies to reinforce positive externalities among customer groups and alleviate negative ones.
    Keywords: sports economics, two-sided markets, multisided platforms, professional sports business, pricing strategies, broadcasting rights
    JEL: L83 L82 L13 M21
    Date: 2008
  2. By: Grigoriev Alexander; Loon Joyce van; Uetz Marc (METEOR)
    Abstract: The highway pricing problem asks for prices to be determined for segments of a single highway such as to maximize the revenue obtainable from a given set of customers with known valuations. The problem is (weakly) NP-hard and a recent quasi-PTAS suggests that a PTAS might be in reach. Yet, so far it has resisted any attempt for constant-factor approximation algorithms. We relate the tractability of the problem to structural properties of customers'' valuations. We show that the problem becomes NP-hard as soon as the average valuations of customers are not homogeneous, even under further restrictions such as monotonicity. Moreover, we derive an efficient approximation algorithm, parameterized along the inhomogeneity of customers'' valuations. Finally, we discuss extensions of our results that go beyond the highway pricing problem.
    Keywords: operations research and management science;
    Date: 2008
  3. By: Sznajd-Weron, Katarzyna; Weron, Rafal; Wloszczowska, Maja
    Abstract: In this paper we introduce two models of opinion dynamics in oligopoly markets and apply them to a situation, where a new entrant challenges two incumbents of the same size. The models differ in the way the two forces influencing consumer choice - (local) social interactions and (global) advertising - interact. We study the general behavior of the models using the Mean Field Approach and Monte Carlo simulations and calibrate the models to data from the Polish telecommunications market. For one of the models criticality is observed - below a certain critical level of advertising the market approaches a lock-in situation, where one market leader dominates the market and all other brands disappear. Interestingly, for both models the best fits to real data are obtained for conformity level 0.3<p<0.4. This agrees very well with the conformity level found by Solomon Asch in his famous social experiment.
    Keywords: opinion dynamics; outflow dynamics; agent-based model; oligopoly market; advertising; mobile telephony
    JEL: D70 L13 M37 C15
    Date: 2008–09–10
  4. By: Ahlberg, Joakim (VTI)
    Abstract: We propose in this paper a discrete bidding model, both on quantities and in pricing. It has a two-unit demand environment where subjects bid for contracts with an unknown redemption value, common to all bidders. Prior to bidding, the bidders receive private signals of information on the (common) value. Both the value and the signals are drawn from a known discrete affiliated joint distribution. <p> The relevant task for the paper is to compare equilibrium strategies and the seller's revenue between the three auction formats. We find that, among the three auction formats below with two players, the Vickrey auction always gives the most revenue to the seller, where the discriminatory auction becomes second and the uniform auction last. We also find that, in equilibrium, bidders bid the same amount on both items in the discriminatory auction; a phenomenon we do not notice in either of the other two auction formats. There, different amount of demand reduction is encountered.
    Keywords: Multi-Unit Auction; Common Value Auction; Discrete Auction; Game Theory
    JEL: C72 D44
    Date: 2008–09–10
  5. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); M. Vittoria Levatia (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany); Matteo Ploner (Max Planck Institute of Economics, Strategic Interaction Group, Jena, Germany; University of Trento, Italy)
    Abstract: On a heterogeneous experimental oligopoly market, sellers choose a price, specify a set-valued prior-free conjecture about the others' behavior, and form their own profit-aspiration for each element of their conjecture. We formally define the concepts of satisficing and prior-free optimality and check if seller participants behave in accordance with them. We find that seller participants are satisficers, but fail to be "prior-free" optimal.
    Keywords: Satisficing behavior, Bounded rationality, Triopoly
    JEL: C92 C72 D43
    Date: 2008–09–09

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