nep-mkt New Economics Papers
on Marketing
Issue of 2010‒04‒04
six papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Targeting in Advertising Markets: Implications for Offline vs. Online Media By Dirk Bergemann; Alessandro Bonatti
  2. Price and Quality Competition By Chioveanu, Ioana
  3. The Dynamics of Brand Equity: A Hedonic Regression Approach to the Laser Printer Market By Ludwig von Auer; Mark Trede
  4. Generating Brand Equity through Corporate Social Responsibility to Key Stakeholders By Anna Torres; Tammo H. A. Bijmolt; Josep A. Tribó
  5. Comparative Statics for a Consumer with Possibly Multiple Optimum Consumption Bundles By Dasgupta, Indraneel; Pattanaik, Prasanta K.
  6. Assesing Advertising Efficiency: Does the Internet Play a Role? By Albena Pergelova; Diego Prior; Josep.Rialp

  1. By: Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT Sloan School of Management)
    Abstract: We develop a model with many heterogeneous advertisers (products) and advertising markets (media). Each advertiser has a different consumer segment for its product, and each medium has a different ability to target advertisement messages. We characterize the competitive equilibrium in the media markets and investigate the role of targeting for the price and allocation of advertisements across media markets. An increase in the targeting ability leads to an increase in the total number of purchases (matches), and hence in the social value of advertisements. Yet, an improved targeting ability also increases the concentration of advertising firms in each market. Surprisingly, we find that the equilibrium price for advertisements is decreasing in the targeting ability over a large range of parameter values. We trace out the implications of targeting for competing media markets. We distinguish offline and online media by their targeting ability: low versus high. We show that competition by an online medium lowers the revenue of the offline medium more than competition by another offline medium of the same size.
    Keywords: Targeting, Advertising, Online advertising, Sponsored search, Media markets
    JEL: D44 D82 D83
    Date: 2010–03
  2. By: Chioveanu, Ioana
    Abstract: This study considers an oligopoly model with simultaneous price and quality choice. Ex-ante homogeneous sellers compete by offering products at one of two quality levels. The consumers have heterogeneous tastes for quality: for some consumers it is efficient to buy a high quality product, while for others it is efficient to buy a low quality product. In the symmetric equilibrium firms use mixed strategies that randomize both price and quality, and obtain strictly positive profits. This framework highlights trade-offs which determine the impact of consumer protection policy in the form of quality standards.
    Keywords: Oligopoly; Price and quality competition; Quality standards
    JEL: L5 L13 L15
    Date: 2009–08–01
  3. By: Ludwig von Auer; Mark Trede
    Abstract: The authors develop a dynamic approach to measuring the evolution of comparative brand premium, an important component of brand equity. A comparative brand premium is defined as the pairwise price difference between two products being identical in every respect but brand. The model is based on hedonic regressions and grounded in economic theory. In constrast to existing approaches, the authors explicitly take into account and model the dynamics of the brand premia. By exploiting the premia’s intertemporal dependence structure, the Bayesian estimation method produces more accurate estimators of the time paths of the brand premia than other methods. In addition, the authors present a novel yet straightforward way to construct confidence bands that cover the entire time series of brand premia with high probability. The data required for estimation are readily available, cheap, and observable on the market under investigation. The authors apply the dynamic hedonic regression to a large and detailed data set about laser printers gathered on a monthly basis over a four-year period. It transpires that, in general, the estimated brand premia change only gradually from period to period. Nevertheless the method can diagnose sudden downturns of a comparative brand premium. The authors’ dynamic hedonic regression approach facilitates the practical evaluation of brand management.
    Keywords: brand equity, price premium, hedonic regression, Bayesian estimation, dynamic linear model
    JEL: C23 L11
    Date: 2010–03
  4. By: Anna Torres; Tammo H. A. Bijmolt; Josep A. Tribó
    Abstract: In this paper we argue that socially responsible policies have a positive impact on a firm’s brand equity in the short-term as well as in the long-term. Moreover, once we distinguish between different stakeholders, we posit that secondary stakeholders such as community are even more important than primary stakeholders (customers, shareholders, workers and suppliers) in generating brand equity. Policies aimed at satisfied community interests act as a mechanism to reinforce trust that gives further credibility to social responsible polices with other stakeholders. The result is a decrease in conflicts among stakeholders and greater stakeholder willingness to provide intangible resources that enhance brand equity. We provide support of our theoretical contentions making use of a panel data composed of 57 firms from 10 countries (the US, Japan, South Korea, France, the UK, Italy, Germany, Finland, Switzerland and the Netherlands) for the period 2002 to 2007. We use detailed information on brand equity obtained from Interbrand and on corporate social responsibility (CSR) provided by the SiRi Global Profile database, as compiled by the Sustainable Investment Research International Company (SiRi).
    Keywords: Brand Equity, Corporate Social Responsibility, Stakeholders.
    Date: 2010–02
  5. By: Dasgupta, Indraneel (University of Durham); Pattanaik, Prasanta K. (University of California, Riverside)
    Abstract: Non-positivity of the generalized substitution effect, non-positivity of the own-price substitution effect, homogeneity of degree zero in all prices and income, and the law of demand are some of the most primitive comparative static results in the standard revealed preference theory of consumers’ behaviour. These results are however derived for demand functions. The literature does not have corresponding comparative static results for the more plausible case of demand correspondences, where the consumer is permitted to have multiple chosen bundles in a given price-income situation. Using the revealed preference approach to the theory of consumers' behaviour, this note establishes such results for demand correspondences; the analysis can be readily adapted to prove corresponding results in the preference-based approach.
    Keywords: demand correspondence, weak axiom of revealed preference, non-positivity of generalized substitution effect, non-positivity of own-price substitution effect, homogeneity of degree zero, law of demand
    JEL: D11
    Date: 2010–03
  6. By: Albena Pergelova (Departament d'Economia de l'Empresa, Universitat Autònoma de Barcelona); Diego Prior (Departament d'Economia de l'Empresa, Universitat Autònoma de Barcelona); Josep.Rialp (Departament d'Economia de l'Empresa, Universitat Autònoma de Barcelona)
    Abstract: This research focuses on a major concern for marketers addressing the claims of inefficiency of the spending on advertising. We examine whether the Internet can help increase overall advertising efficiency. Using a sample from the Spanish automobile industry, we combine a nonparametric method - Data Envelopment Analysis - with recent important insights from statistics and econometrics studies, and we find that online advertising improves the efficiency levels and this effect is more pronounced in the long-term temporal framework.
    Date: 2009–12

This nep-mkt issue is ©2010 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.