nep-mkt New Economics Papers
on Marketing
Issue of 2009‒04‒18
seven papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. Analisi del mercato Italiano del vino Syrah By Seccia, Antonio; Nardone, Gianluca; Stasi, Antonio
  2. Measurement of the Consumer Benefit of Competition in Retail Outlets By MATSUURA Toshiyuki; SUNADA Mitsuru
  3. An Empirical Model of Search with Vertically Differentiated Products By Matthijs R Wildenbeest
  4. Gasoline prices jump up on Mondays: An outcome of aggressive competition? By Foros, Øystein; Steen, Frode
  5. Competition Between Payment Systems By George Gardner; Andrew Stone
  6. Assessment of Kenya's Domestic Horticultural Production and Marketing Systems and Lessons for the future By David L. Tschirley; Miltone Ayieko
  7. Profit-shifting in Two-sided Markets By Schindler, Dirk; Schjelderup, Guttorm

  1. By: Seccia, Antonio; Nardone, Gianluca; Stasi, Antonio
    Abstract: In order to fully understand Syrah wine market in Italy both supply and demand need to be studied. While supply is analyzed with the simple (benchmarking) comparison of the descriptive statistics between Syrah Italian wines and other high quality red Italian wines, the demand is studied econometrically. A double logarithmic approach has been chosen for its simplicity as well as its mathematical tractability, allowing for direct applicability and replicability at industry level. The information retrieved in these analysis results fundamental for the application of appropriate marketing strategies, in order to set the market efficiency at the margin. Findings show exact relationships allowing for price and marketing targets adjustments. Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis, describing the competitive context and the Syrah wine sub-sector, would have been also important for the focus of this study for completeness purposes. Nonetheless, the aim of this analysis is to furnish valuable information about supply and demand in order to improve marketing efficiency for the Syrah wine. The contribution of this study to the existing knowledge about Syrah wine market is twofold: methodological because it identifies ad hoc methodologies that are easily applicable by the industry to understand such a “thin” market, and informational because results are directly applicable for marketing strategies.
    Keywords: Syrah; Demand; Supply; Benchmark
    JEL: L66
    Date: 2008–12–16
  2. By: MATSUURA Toshiyuki; SUNADA Mitsuru
    Abstract: In this paper, we estimate the consumer benefits of competition in the retail industry. In our analysis, we incorporated the service quality of retail outlets as outputs. In Japan, in the process of the deregulation of entry restriction on large-scale retail stores, specialty supermarkets have increased their market share with a low price strategy. At the same time, despite their high prices, convenience stores have increased their market share through 1990s. We demonstrate changes in market share for each retail format are explained by the changes in each formats respective service quality.
    Date: 2009–04
  3. By: Matthijs R Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: This paper presents a non-sequential search model that allows for vertical product differentiation. In the unique symmetric equilibrium firms with different characteristics draw utilities from a common utility distribution, resulting in asymmetric price distributions. The model therefore provides a theoretical rationale for explaining price dispersion as a result of quality differences and search frictions together. More specifically, the model can explain the frequent and asymmetric price changes reported in several empirical papers, but also why some firms have persistently higher prices than others. Using the equilibrium conditions derived from the model, we show how to estimate search costs by maximum likelihood using only prices. The method is applied to a data set of prices for grocery items from supermarkets in the UK. Estimates reveal that most of the observed price variation can be explained by supermarket heterogeneity and that the estimated amount of search is low in this market. We show that ignoring vertical product differentiation results in an overestimation of search costs. Moreover, estimated search costs using a basket of organic items are on average higher than that of a similar non-organic basket. We also simulate how changes in search costs will affect behavior of stores and consumers.
    Keywords: consumer search, product differentiation, price dispersion, structural estimation
    JEL: C14 D83 L13
    Date: 2009–04
  4. By: Foros, Øystein (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Steen, Frode (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper examines Norwegian gasoline pump prices using daily station-specific observations from March 2003 to March 2006. Whereas studies that have analyzed similar price cycles in other countries find support for the Edgeworth cycle theory (Maskin and Tirole, 1988), we demonstrate that Norwegian gasoline price cycles involve a form of coordinated behavior. Retail gasoline prices follow a fixed weekly pattern, where retail outlets all over Norway simultaneously increase their prices to the same level every Monday at noon. Consequently, the sharp price increase is tied to time rather than the current price level. The gasoline companies’ headquarters publish a recommended price that de facto is a RPM arrangement towards the retail outlets. The vertical arrangement is industry-wide adopted, and is used to coordinate the time and the level for retail price increases among the big four gasoline companies. Monday changed from being the low-price day to becoming the high-price day almost ‘overnight’ in April 2004, and we empirically establish that the change corresponds to a significant jump in the gross margin.
    Keywords: Gasoline Prices; Resale Price Maintenance
    JEL: E30 E32
    Date: 2009–04–14
  5. By: George Gardner (Reserve Bank of Australia); Andrew Stone (Reserve Bank of Australia)
    Abstract: This paper is the first of two companion pieces examining competition between payment systems. Here we develop a model of competing platforms which generalises that considered by Chakravorti and Roson (2006). In particular, our model allows for fully endogenous multi-homing on both the merchant and consumer sides of the market. We develop geometric frameworks for understanding the aggregate decisions of consumers to hold, and merchants to accept, different payment instruments, and how these decisions will be influenced by the pricing choices of the platforms. We also illustrate a new potential source of non-uniqueness in the aggregate behaviour of consumers and merchants which is distinct from the well-known ‘chicken and egg’ phenomenon – and indeed can only arise in the context of multiple competing platforms. Finally, we briefly discuss how this new source of non-uniqueness may nevertheless shed light on the ‘chicken and egg’ debate in relation to the development of new payment systems.
    Keywords: payments policy; two-sided markets; interchange fees
    JEL: D40 E42 L14
    Date: 2009–04
  6. By: David L. Tschirley; Miltone Ayieko
    Abstract: After reviewing trends in the production and marketing of fresh produce for the domestic market in Kenya since 1997, this paper presents detailed information on the structure of the flow of this produce from rural areas to wholesale markets in Nairobi and from those wholesale markets to assorted retail markets. Market shares are estimated by product for geographic areas supplying Nairobi, and for each important wholesale and retail market in the city. It is found that horticultural production for the domestic market is keeping up with rural population growth but not with the much faster urban population growth. The urban wholesaling and retailing system has decentralized dramatically and with little planning over the past two decades in response to lack of investment in public market places. In the current system, all participants are subjected to high costs and poor quality, and many traders, especially but not only those in kiosks, are subject to theft and even bodily injury. Collaborative planning for new investment between city officials and farmer- and trader organizations is badly needed; positive signs of movement in this direction include a more constructive approach to kiosks and joint public/private planning for a new wholesale market outside Nairobi. As new approaches to wholesaling and retailing are considered in response to Vision 2030, the continuing importance of existing market places means that complementary improvements in these markets, at the same time that investments in new markets are being made, will have major positive effects on farmers and consumers.
    Keywords: Africa, horticulture, market, production
    JEL: Q13
    Date: 2008–09
  7. By: Schindler, Dirk (Universität Konstanz); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: We investigate how multinational two-sided platform firms set their prices on intra firm transactions. Two-sided platform firms derive income from two customer groups that are connected through at least one positive network externality from one group to the other. A main finding is that even in the absence of taxation transfer prices deviate from marginal cost of production. A second result of the paper is that it is inherently difficult to establish arm's length prices in two-sided markets. Finally, we find that differences in national tax rates may be welfare enhancing despite the use of such prices as a profit shifting device.
    Keywords: Multinational enterprises; two-sided markets; profit shifting
    JEL: D21 L24
    Date: 2009–04–14

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