nep-mkt New Economics Papers
on Marketing
Issue of 2011‒07‒02
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Consumer behavioural biases in competition: A survey By Huck, Steffen; Zhou, Jidong
  2. From Controlled to Loose Co-Production: Benefits Distribution Between Firms and Consumers. By Eleonora Di Maria; Marco Paiola
  3. Agritourism and Direct Agricultural Marketing in Washington State: An Industry Profile By Gregmar Galinato; Suzette Galinato; Hayley Chouinard; Mykel Taylor; Phil Wandschneider
  4. Side Effects of Competition: the Role of Advertising and Promotion in Pharmaceutical Markets By Guy David; Sara Markowitz

  1. By: Huck, Steffen; Zhou, Jidong
    Abstract: This is a survey of studies that examine competition in the presence of behaviourally biased or boundedly rational consumers. It will tackle questions such as: How does competition and pricing change when consumers are biased? Can inefficiencies that arise from consumer behavioural biases be mitigated by lowering barriers to entry? Do biased consumers make rational ones better or worse off? And will biased consumer behaviour be overcome through learning or education?
    Keywords: Behavioural Economics; Industrial Organization; Biased Consumers
    JEL: D21 D4 L1
    Date: 2011–05
  2. By: Eleonora Di Maria (University of Padova); Marco Paiola (University of Padova)
    Abstract: Literature on innovation and recent marketing contributions stressed the involvement of consumers in the co-production of value, by emphasizing either the role of a single consumer or the community in such process. Few studies coupled the two interrelated dimensions and analyzed their impacts on customersÕ behavior and firm marketing strategies, specifically in terms of benefits achieved. The paper aims at filling this theoretical gap by distinguishing between individual and social co-production, where different levels of consumer engagement can be identified with diverse value sharing outcomes. We argue that not all customers are interested in being involved in the co-production concerning all their consumption activities. Depending on their commitment to participate (centrality of the consumption activity for the customer) and the co-production nature (individual vs. social) four alternative options of co-production emerge, with distinctive managerial features.
    Keywords: co-production, consumer behavior, community, innovation.
    JEL: O31 L19 M31
    Date: 2011–06
  3. By: Gregmar Galinato; Suzette Galinato; Hayley Chouinard; Mykel Taylor; Phil Wandschneider (School of Economic Sciences, Washington State University)
    Abstract: The objective of this report is to take stock of the activities, motivations, impacts and challenges faced by the farms in Washington as they relate to agritourism and direct marketing. We characterize the agritourism entrepreneurship and direct marketing activities in different counties of the State through a direct survey of industry respondents. Also, we determine the extent to which Washington’s agritourism and direct marketing industry attracts local and foreign tourists. We find that the direct marketing industry in the State is well established but the agritourism activities are still developing. Most farms that conduct agritourism are small farms (with less than $250,000 of total sales), whereas direct marketing farms vary in size and include some larger farms in terms of sales. The primary reasons for operating are to earn additional income and educate the local populace regarding agricultural and local activities which illustrates economic and altruistic motives for farmers. Respondents feel that the main obstacles to the industry are State laws and regulations and concerns about liability. Farm operators in the industry rely on social networks to enhance production capacity as well as help increase demand for their product or service. Development of social networks may help overcome current and future obstacles of farms leading to overall growth of the industry.
    Keywords: agritourism, direct agricultural marketing, Washington State
    JEL: Q12 Q13
    Date: 2010–10
  4. By: Guy David; Sara Markowitz
    Abstract: The extent of pharmaceutical advertising and promotion can be characterized by a balancing act between profitable demand expansions and potentially unfavorable subsequent regulatory actions. However, this balance also depends on the nature of competition (e.g. monopoly versus oligopoly). In this paper we model the firm’s behavior under different competitive scenarios and test the model’s predictions using a novel combination of sales, promotion, advertising, and adverse event reports data. We focus on the market for erectile dysfunction drugs as the basis for estimation. This market is ideal for analysis as it is characterized by an abrupt shift in structure, all drugs are branded, the drugs are associated with adverse health events, and have extensive advertising and promotion. We find that advertising and promotion expenditures increase own market share but also increase the share of adverse drug reactions. Competitors’ spending decreases market share, while also having an influence on adverse drug reactions.
    JEL: I0 K0 K2
    Date: 2011–06

This nep-mkt issue is ©2011 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.