nep-mkt New Economics Papers
on Marketing
Issue of 2009‒02‒22
eight papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. The Efficacy of the Grid Marketing Channel for Fed Cattle By Scott W. Fausti; Bashir A. Qasmi; Matthew A. Diersen
  2. Management and Marketing 2009 Winter Wheat By Alan May; Jack Davis; Matthew Diersen
  3. The Effects of Product Ageing on Demand: The Case of Digital Cameras By Lou, Weifang; Prentice, David; Yin, Xiangkang
  4. Dynamics of Consumer Demand for New Durable Goods By Gautam Gowrisankaran; Marc Rysman
  5. Pricing strategies in two-sided platforms: The role of sellers’ competition By María Fernanda Viecens
  6. When does variety increase with quality? By Basov, Suren; Danilkina, Svetlana; Prentice, David
  7. Making Sense of Non-Binding Retail-Price Recommendations By Stefan Bühler; Dennis L. Gärtner
  8. New Ways to Make People Save: A Social Marketing Approach By Annamaria Lusardi; Punam Anand Keller; Adam M. Keller

  1. By: Scott W. Fausti (Department of Economics, South Dakota State University); Bashir A. Qasmi (Department of Economics, South Dakota State University); Matthew A. Diersen (Department of Economics, South Dakota State University)
    Abstract: Beef industry data suggest that carcass yield and quality grades have shown little improvement over the last six years. Trend analysis of grid market share and carcass quality suggests that grid pricing has not made sufficient progress in achieving the goals envisioned for it as a value based marketing system.
    Keywords: grid pricing, price discovery, price reporting, slaughter cattle
    JEL: Q13 Q11
    Date: 2008–02
  2. By: Alan May (South Dakota State University); Jack Davis (South Dakota State University); Matthew Diersen (South Dakota State University)
    Date: 2008–09
  3. By: Lou, Weifang; Prentice, David; Yin, Xiangkang
    Abstract: The static differentiated product demand model when applied to products with rapid product turnover and declining prices, yields implausible results. One response is to explicitly model the inter-temporal choices of consumers but computational demands require restrictive assumptions on consumer heterogeneity and limits on the characteristics included in the model. We propose, instead, to supplement the static model with a control for the age that each product has been in the market. This approach is applied to the US digital camera market and we find we obtain more plausible estimates. Our results are consistent with inter-temporal price discrimination by firms. Furthermore, our results suggest that ignoring the effects of product ageing may result in substantially overestimated price elasticities and technological progress and underestimated price-cost markups.
    Keywords: Discrete Choice; Demand Dynamics; Forward-Looking Behavior; Heterogeneous Preferences.
    JEL: L0 L11 D12 D43 L63
    Date: 2008–11–03
  4. By: Gautam Gowrisankaran; Marc Rysman
    Abstract: This paper specifies and estimates a dynamic model of consumer preferences for new durable goods with persistent heterogeneous consumer tastes, rational expectations about future products and repeat purchases over time. Most new consumer durable goods, particularly consumer electronics, are characterized by relatively high initial prices followed by rapid declines in prices and improvements in quality. The evolving nature of product attributes suggests the importance of modeling dynamics in estimating consumer preferences. We estimate the model on the digital camcorder industry using a panel data set on prices, sales and characteristics. We find that dynamics are a very important determinant of consumer preferences and that estimated coefficients are more plausible than with traditional static models. We use the estimates to evaluate cost-of-living indices for new consumer goods and dynamic demand elasticities.
    JEL: C23 E31 L1 L13 L68
    Date: 2009–02
  5. By: María Fernanda Viecens
    Abstract: This paper offers a model of a two-sided platform to inspect how competition and prices in the seller side affect the platform’s behavior, incentives and profits. When setting prices, sellers may be constrained by one of two margins: the demand margin and the competition margin. According to the competition margin a seller sets its price equal to the marginal contribution to the users utility. However, a seller may set a lower price because it also has to take into account the demand margin: a higher price reduces the overall demand for the platform and the sellers. This central result is used to compare the efficiency of vertical integration and the private incentives to partially integrate. Several interesting insights are obtained; in particular, the model can explain the tendency of firms which operate software platforms to integrate with so-called killer applications. The paper also shows that the platform has an instrument to profitable affect sellers’ prices and to induce the margin that will bind. It is proved that the degree of competition among sellers is a crucial factor determining profitability of the platform.
    Date: 2009–02
  6. By: Basov, Suren; Danilkina, Svetlana; Prentice, David
    Abstract: Casual empiricism suggests higher quality is associated with greater variety. However, recent theoretical and empirical research has either not considered this link, or has been unable to establish unambiguous predictions about the relationship between quality and variety. In this paper we develop a simple model, which predicts that for low qualities variety should be positively correlated with quality and we establish conditions under which variety will either increase or decrease with quality at higher quality levels. The monopolist uses variety to increase the profitability of price discrimination across product lines of different qualities, by increasing the likelihood consumers choose high price products among products yielding the same utility. We show that the number of varieties offered by the monopolist is greater than the social optimum. The predictions of the model are supported by an analysis of the market for cars. A wide range of car manufacturers are found to offer a hump-shaped distribution of varieties.
    Keywords: Price discrimination; product variety; bounded rationality; cars.
    JEL: L11 L62 D8 L15 D4
    Date: 2009–02–02
  7. By: Stefan Bühler (University of St.Gallen); Dennis L. Gärtner (Socioeconomic Institute, University of Zurich)
    Abstract: This paper provides a theoretical rationale for non-binding retail price recommendations (RPRs) in vertical supply relations. Analyzing a bilateral manufacturer-retailer relationship with repeated trade, we show that linear relational contracts can implement the surplus-maximizing outcome. If the manufacturer has private information about production costs or consumer demand, RPRs may serve as a communication device from manufacturer to retailer. We characterize the properties of efficient bilateral relational contracts with RPRs and discuss extensions to settings where consumer demand is affected by RPRs, and where there are multiple retailers or competing supply chains.
    Keywords: vertical relationships, relational contracts, asymmetric information, price recommendations
    JEL: D23 D43 L14 L15
    Date: 2009–02
  8. By: Annamaria Lusardi; Punam Anand Keller; Adam M. Keller
    Abstract: In this study, we use a social marketing approach to develop a planning aid to help new employees at a not-for-profit institution contribute to supplementary pensions. We employed different methods, such as surveys, focus groups and in-depth interviews, to "listen" to employees' needs and difficulties with saving. Moreover, we targeted specific groups that were less likely to save and contribute to supplementary pensions, such as women and low-income employees. The program we developed is not only effective but also inexpensive. While this program was implemented at a single institution, it is suitable to be applied to a variety of employers and demographic groups.
    JEL: D91
    Date: 2009–02

This nep-mkt issue is ©2009 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.