nep-mkt New Economics Papers
on Marketing
Issue of 2009‒04‒25
four papers chosen by
Joao Carlos Correia Leitao
Technical University of Lisbon

  1. When Does the Price Affect the Taste? Results from a Wine Experiment By Almenberg, Johan; Dreber, Anna
  2. State Dependence and Alternative Explanations for Consumer Inertia By Jean-Pierre Dubé; Güenter J. Hitsch; Peter E. Rossi
  3. How does biotech food labelling affect consumers’ purchasing preferences and the market? Evidence from urban China By Zhong, Funing; Chen, Xi
  4. Search in the Product Market and the Real Business Cycle. By Thomas Y. Mathä; Olivier Pierrard

  1. By: Almenberg, Johan (Dept. of Economics, Stockholm School of Economics); Dreber, Anna (Dept. of Economics, Stockholm School of Economics)
    Abstract: We designed an experiment that examines how knowledge about the price of a good, and the time at which the information is received, affects how the good is experienced. The good in question was wine, and the price was either high or low. Our results suggest that hosts offering wine to guests can safely reveal the price: much is gained if the wine is expensive, and little is lost if it is cheap. Disclosing the high price before tasting the wine produces considerably higher ratings, although only from women. Disclosing the low price, by contrast, does not result in lower ratings. Our finding indicates that price not only serves to clear markets, it also serves as a marketing tool; it influences expectations that in turn shape a consumer’s experience. In addition, our results suggest that men and women respond differently to attribute information.
    Keywords: Price-Quality Heuristic; Attribute Information; Role of Expectations; Marketing; Blind Tasting; Wine.
    JEL: C91 D83 M31
    Date: 2009–04–19
  2. By: Jean-Pierre Dubé; Güenter J. Hitsch; Peter E. Rossi
    Abstract: For many consumer packaged goods products, researchers have documented a form of state dependence whereby consumers become “loyal†to products they have consumed in the past. That is, consumers behave as though there is a utility premium from continuing to purchase the same product as they have purchased in the past or, equivalently, there is a psychological cost to switching products. However, it has not been established that this form of state dependence can be identified in the presence of consumer heterogeneity of an unknown form. Most importantly, before this inertia can be given a structural interpretation and used in policy experiments such as counterfactual pricing exercises,alternative explanations which might give rise to similar consumer behavior must be ruled out. We develop a flexible model of heterogeneity which can be given a semi-parametric interpretation and rule out alternative explanations for positive state dependence such as autocorrelated choice errors, consumer search, or consumer learning.
    JEL: D12 L0 M31
    Date: 2009–04
  3. By: Zhong, Funing; Chen, Xi
    Abstract: This paper examines whether and how biotech labelling has had an impact on Chinese consumers’ vegetable oil purchasing decisions. The authors used sales data from Nanjing and household survey data from Jiangsu province. They found that the market share of biotech oils immediately decreased as a result, though the decrease was small in absolute terms (but statistically significant). In addition, the changes in the biotech oil market share were affected by the structural effect of the rich, while there was no apparent gross consumption effect of the poor, which could have been underestimated due to a series of factors concerning the two datasets applied.
    Keywords: biotech labelling; actual sales data; vegetable oil; market share; China
    JEL: Q13 P46 Q18
    Date: 2009–03
  4. By: Thomas Y. Mathä (Central Bank of Luxembourg, 2 bd. Royal, L-2983 Luxembourg.); Olivier Pierrard (Central Bank of Luxembourg, 2 bd. Royal, L-2983 Luxembourg.)
    Abstract: We develop a search-matching model, where firms search for customers (e.g. in form of advertising). Firms use long-term contracts and bargain over prices, resulting in a price mark up above marginal cost, which is procyclical and depends on firms’ relative bargaining power. Product market frictions decrease the steady state equilibrium, improve the cyclical properties of the model and provide a more realistic picture of firms’ business environment. This suggests that product market frictions may well be crucial in explaining business cycle fluctuations. Finally, we also show that welfare costs of price rigidities are negligible relative to welfare costs of frictions. JEL Classification: E10, E31, E32.
    Keywords: Business cycle, Frictions, Product market, Price bargain.
    Date: 2009–03

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