nep-mkt New Economics Papers
on Marketing
Issue of 2008‒10‒07
twelve papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Strategic Informative Advertising in a Horizontally Differentiated Duopoly By Levent Çelik
  2. Corporate Brand Building at Shell-Mex Ltd in the Interwar Period By Michael Heller
  3. Assessing the potential impact on poverty of rising cereals prices : the case of Ghana By Wodon, Quentin; Tsimpo, Clarence; Coulombe, Harold
  4. Market Structure and the Diffusion of E-Commerce: Evidence from the Retail Banking Industry By Jason Allen; Robert Clark; Jean-François Houde
  5. Price Setting and Market Structure: An Empirical Analysis of Micro Data By Fabricio Coricelli; Roman Horváth
  6. An examination of mobile banking and mobile payments: building adoption as experience goods? By Julia S. Cheney
  7. Lerning by Copying By Francisco Martinez
  8. Comparing the impact of food and energy price shocks on consumers : a social accounting matrix analysis for Ghana By Parra, Juan Carlos; Wodon, Quentin
  9. Potential impact of higher food prices on poverty : summary estimates for a dozen west and central African countries By Wodon, Quentin; Tsimpo, Clarence; Backiny-Yetna, Prospere; Joseph, George; Adoho, Franck; Coulombe, Harold
  10. Integrating European retail payment systems: some economics of SEPA By Kemppainen, Kari
  11. Rice prices and poverty in Liberia By Tsimpo, Clarence; Wodon, Quentin
  12. Turning Trade Marks into Brands: how Advertising Agencies Created Brands in the Global Market Place, 1900-1930 By Stefan Schwarzkopf

  1. By: Levent Çelik
    Abstract: When firms possess information about their competitors’ products, their advertisements may leak extra information. I analyze this within a duopoly television market that lasts for two periods. Each station may advertise its upcoming program by airing a tune-in during the first program. Viewers may alternatively sample a program. I find that each station’s equilibrium tune-in decision depends on both upcoming programs - thereby revealing more information than the actual content - when the sampling cost is sufficiently low. Otherwise, tune-in decisions are made independently. It is welfare improving to ban tune-ins in the latter case but not in the former.
    Keywords: Informative advertising, Tune-ins, Sampling, Information disclosure, Signaling.
    JEL: D83 L13 M37
    Date: 2008–09
  2. By: Michael Heller
    Abstract: This paper is an analysis of corporate brand building at Shell-Mex Ltd in the inter-war period in Britain. While there has been some historical analysis of product brand development in the UK, this has not been the case in corporate or institutional brand building which has remained neglected. This paper outlines this process at Shell-Mex, the distributive arm in Britain for the Shell Transport and Trading Company, part of the larger Royal Dutch Shell Group. The paper argues that Shell consistently and coherently built up its corporate brand in the inter-war period through a series of strategies which included publicity, sponsorship of record breaking flights, links with empire, use of prominent artists, documentaries, road guides and association with the British countryside. This development of its corporate brand had multiple benefits for the group, both internally within its organisation, and externally in relation to its product brands and overall competitiveness.
    Keywords: brand building, Shell-Mex
    JEL: M31 N84
    Date: 2008–09
  3. By: Wodon, Quentin; Tsimpo, Clarence; Coulombe, Harold
    Abstract: Concerns have been raised about the impact of rising food prices worldwide on the poor. To assess the (short term) impact of rising food prices in any particular country it is necessary to look at both the impact on food producers (who benefit from an increase in prices) and food consumers (who loose out when the price increases), with a focus on poor producers and consumers. In Ghana, the impact of a change in the price of rice is not ambiguous because a large share of the rice consumed is imported, so that the negative impact for consumers is much larger than the positive impact for producers. For maize by contrast, the impact is ambiguous since much of the consumption is locally produced. Using a recent and comprehensive household survey, this paper provides an assessment of the potential impact of higher food prices on the poor in Ghana using both simple statistical analysis and non-parametric methods. The paper finds that rising food prices for rice, maize, and other cereals would together lead to an increase in poverty, but that by contrast to a number of other countries, this increase, while not negligible, may not be as large as feared.
    Keywords: Rural Poverty Reduction,Population Policies,Food&Beverage Industry,Achieving Shared Growth
    Date: 2008–10–01
  4. By: Jason Allen; Robert Clark; Jean-François Houde
    Abstract: This paper studies the role that market structure plays in affecting the diffusion of electronic banking. Electronic banking (and electronic commerce more generally) reduces the cost of performing many types of transactions for firms. The full benefits for firms from adoption, however, only accrue once consumers begin to perform a significant share of their transactions online. Since there are learning costs to adopting the new technology firms may try to encourage consumers to go online by affecting the relative quality of the online and offline options. Their ability to do so is a function of market structure. In more competitive markets, reducing the relative attractiveness of the offline option involves the risk of losing customers (or potential customers) to competitors, whereas, this is less of a concern for a more dominant firm. We develop a model of branch-service quality choice with switching costs meant to characterize the trade-off banks face when rationalizing their network between technology penetration and business stealing. The model is solved numerically and we show that the incentive to lower branch-service quality and drive consumers into electronic banking is greater in more concentrated markets and for more dominant banks. We find support for the predictions of the model using a panel of household survey data on electronic payment usage as well as branch location data, which we use to construct measures of branch quality.
    Keywords: Financial institutions; Market structure and pricing
    JEL: D14 D4 G21 L1
    Date: 2008
  5. By: Fabricio Coricelli (University of Siena; University of Paris I; CEPR); Roman Horváth (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Czech National Bank)
    Abstract: Most empirical studies on price setting that use micro data focus on advanced industrial countries. In this paper we analyze the experience of an emerging economy, Slovakia, using a large micro-level dataset that accounts for a substantial part of the consumer price index (about 5 million observations). We find that market structure is an important determinant of pricing behavior. The effect of market structure on persistence of inflation results from two conflicting forces. Increased competition may reduce persistence by increasing the frequency of price changes. In contrast, higher competition may increase persistence through inertial behaviour induced by the strategic complementarity among price setters. In our case study, we find that the latter effects dominate. Indeed, the dispersion of prices is higher while persistence is lower in the non-tradable sectors, suggesting that higher competition is not conducive to lower persistence. Furthermore, we find that the frequency of price changes depends negatively on the price dispersion and positively on the product-specific inflation. These results seem consistent with predictions of Calvo’s staggered price model.
    Keywords: price setting, market structure, emerging markets
    JEL: D40 E31
    Date: 2008–09
  6. By: Julia S. Cheney
    Abstract: This paper examines consumer adoption of mobile banking and mobile payments using the experience goods and learning by doing constructs as a framework to better understand adoption patterns in the United States and how these may differ in other world markets. Consumer experience and familiarity with mobile devices is considered along with three relatively new communication technologies – SMS text messaging, wireless Internet access, and near field communication (NFC) – that are making important contributions to mobile financial services. Online banking and contactless payments — and consumers’ experience with them — are also studied as “building blocks” to mobile financial services. Furthermore, this analysis considers other factors that are affecting adoption patterns, including financial inclusion opportunities, data security problems, and coordination issues. Together, the building blocks and these other factors will influence how markets for mobile financial services develop.
    Date: 2008
  7. By: Francisco Martinez (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: We analyze the behavior of a multiproduct monopolist, a duopolist and consumers who are able to learn by copying. We show that when the effect of learning by copying is strong and the cost of copying is low enough, consumers decide to copy all goods, independently of their prices. This suggests that the DRM systems implemented by the digital industry have adverse consequences, because they hinder the use of original information goods and provide consumers with an incentive for copying. Moreover, we obtain two more kinds of equilibrium: one where each firm sells to the consumer who values its good more highly and another where each firm sells to all consumers. These results are robust when we consider that consumers’ preferences are “opposed.” Finally, by analyzing social welfare we show that, from a static perspective, the multiproduct monopoly provides a welfare at least as great as the duopoly and, from a dynamic perspective, a duopolist has at least the same incentive to create a new product as a monopolist.
    Keywords: Consumers, Learning by Copying, Opposed Preferences, DRM, Copy, Piracy.
    JEL: K42 L11 L86 O34
    Date: 2008–06–13
  8. By: Parra, Juan Carlos; Wodon, Quentin
    Abstract: Many countries have been affected by food and oil price shocks. Rising energy costs have manifested themselves through higher prices of gas at the pump and through price increases for many other goods such as kerosene and transport. But in some countries there has also been some degree of protection for consumers for example when authorities have chosen to try to keep electricity tariffs affordable through implicit subsidies (which are unfortunately often poorly targeted). For food prices, the effect on consumers has often been more rapid than for oil-related products, as the increase in import prices have been typically fully passed on to consumers and has often been accompanied by increases in the prices of domestically produced foods. Recent attention has therefore rightly been focused on food prices, but the issue of oil prices is important as well. While food prices tend to have a larger direct impact on consumers due to the larger share of food in total household consumption, oil prices may have larger multiplier effects than food prices because oil-related products are used as intermediary products in many productive sectors. It therefore remains an open question as to whether the medium-term impact of food or oil prices is likely to be larger in any given country. It also remains open to question as to whether urban as opposed to rural households are most likely to be affected. While urban households are likely to rely on consumption of imported goods more than rural households, the weight of food and possibly oil-related products may well be larger in the consumption patterns of rural than urban households. Answering these questions may be useful to guide discussions on compensatory measures that governments can take to respond to the twin crisis of higher food and oil prices. In this context the objective of this paper is to provide a comparative analysis of the multiplier impact of both types of price shocks using a recent Social Accounting Matrix for Ghana. The paper finds that both the direct impacts of food prices and the indirect impacts of oil prices are potentially large, so that both should be dealt with by authorities when considering compensatory measures to protect households from higher consumer prices.
    Keywords: Markets and Market Access,Food&Beverage Industry,Energy Production and Transportation,Emerging Markets,Access to Markets
    Date: 2008–10–01
  9. By: Wodon, Quentin; Tsimpo, Clarence; Backiny-Yetna, Prospere; Joseph, George; Adoho, Franck; Coulombe, Harold
    Abstract: Concerns have been raised about the impact of rising food prices worldwide on the poor. To assess the impact of rising food prices in any particular country it is necessary to look at both the impact on food producers who are poor or near-poor and could benefit from an increase in prices and food consumers who are poor or near-poor and would loose out when the price increases. In most West and Central African countries, the sign (positive or negative) of the impact is not ambiguous because a substantial share of food consumption is imported, so that the negative impact for consumers is larger than the positive impact for net sellers of locally produced foods. Yet even if the sign of the impact is clear, its magnitude is not. Using a set of recent and comprehensive household surveys, this paper summarizes findings from an assessment of the potential impact of higher food prices on the poor in a dozen countries. Rising food prices for rice, wheat, maize, and other cereals as well as for milk, sugar and vegetable oils could lead to a substantial increase in poverty in many of the countries. At the same time, the data suggest that the magnitude of the increase in poverty between different countries is likely to be different. Finally, the data suggest that a large share of the increase in poverty will consist of deeper levels of poverty among households who are already poor, even if there will also be a larger number of poor households in the various countries.
    Keywords: Rural Poverty Reduction,Food&Beverage Industry,Population Policies,Poverty Lines
    Date: 2008–10–01
  10. By: Kemppainen, Kari (Bank of Finland Research)
    Abstract: Using a spatial competition model of retail payment networks, this paper discusses the likely economic consequences associated with the formation of the Single Euro Payments Area (SEPA). The model considers an expansion of positive network externalities on the demand side and adjustment cost on the supply side and reveals that the introduction of SEPA may not lead to a fully competitive and integrated retail payment markets. This is especially the case when the markets are segments before the introduction of SEPA. In such a scenario, the post-integrated markets are likely to remain segmented or will be characterised by a kinked equilibrium where no significant price competition takes place. In both outcomes, SEPA leads to increased prices, larger network sizes (ie increased number of customers) and a higher consumer surplus. Additionally, if the SEPA-induced adjustment costs for payment networks are not prohibitively high, SEPA may also lead to an increase in both profits and social welfare.
    Keywords: integration; network effects; retail payments
    JEL: G21 L14 L15
    Date: 2008–09–24
  11. By: Tsimpo, Clarence; Wodon, Quentin
    Abstract: When assessing the impact of changes in food prices on poverty, it is important to consider food producers (who may benefit from an increase in prices) as well as consumers (who loose out when the price increases), with a focus on poor consumers and producers. In the case of rice in Liberia however, the impact of a change in price is not ambiguous because a large share of the rice consumed is imported, while the rice locally produced is used mostly for auto-consumption. An increase in the price of rice will result in higher poverty in the country as a whole (even if some local producers will gain from this increase), while a reduction in price will reduce poverty. Furthermore, because rice represents a large share of food consumption, any change in its price is likely to have a large impact on poverty. Using data from the 2007 CWIQ survey, the paper finds that an increase or decrease of 20 percent in the price of rice could lead to an increase or decrease of three to four percentage points in the share of the population in poverty.
    Keywords: Food&Beverage Industry,Rural Poverty Reduction,Crops&Crop Management Systems,Population Policies
    Date: 2008–10–01
  12. By: Stefan Schwarzkopf
    Abstract: While historians and management students are familiar with the lore of how an internal memo at Procter & Gamble ‘invented’ brand management in 1931 (Fullerton, Low 1994; Dyer et al. 2004), little is known about how advertising agencies conceptualised and practiced branding during the early parts of the twentieth century. This paper presents evidence that by the 1920s advertising agencies drew on shared forms of implicit knowledge about consumer psychology which anticipated post-1950s debates about brand image, brand personality, brand identity, lifestyle brands and the global brand. I argue that large-scale, international advertising agencies discovered the symbolic and emotional capacities of brands in building consumer loyalty and in forming certain consumer identities much earlier than usually acknowledged. American and British agencies developed the field of tacit knowledge about the brand-consumer relationship as a source of competitive advantage in the competition for clients which increasingly sought consumers in overseas markets.
    Keywords: brands, marketing, advertising, advertising agencies, business history
    JEL: M31 M37 N84
    Date: 2008–08

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.