nep-mkt New Economics Papers
on Marketing
Issue of 2011‒08‒02
ten papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Customer recognition and competition By Oz Shy; Rune Stenbacka
  2. Comparison Sites By Jose Luis Moraga-Gonzalez; Matthijs R. Wildenbeest
  3. Parting with "Blue Monday" – Preferences in Home Production and Consumer Responses to Innovations By Ulrich Witt; Julia Sophie Woersdorfer
  5. Technology licensing by advertising supported media platforms: An application to internet search engines By Sapi, Geza; Suleymanova, Irina
  6. Consumer Heterogeneity and Markups over the Business Cycle: Evidence from the Airline Industry By Marco Cornia; Kristopher S. Gerardi, Adam Hale Shapiro; Adam Hale Shapiro
  7. Can a click buy a little happiness? The impact of business-to-consumer e-commerce on subjective well-being By Sabatini, Fabio
  8. Competition among Spatially Differentiated Firms: An Estimator with an Application to Cement By Matthew J Osborne; Nathan H. Miller
  9. Revisiting the Use of Customer Information for CRM By Reimer, Kerstin; Becker, Jan U.
  10. Paying Positive to Go Negative: Advertisers' Competition and Media Reports By A. Blasco; P. Pin; F. Sobbrio

  1. By: Oz Shy; Rune Stenbacka
    Abstract: We introduce three types of consumer recognition: identity recognition, asymmetric preference recognition, and symmetric preference recognition. We characterize price equilibria and compare profits, consumer surplus, and total welfare. Asymmetric preference recognition enhances profits compared with identity recognition, but firms have no incentive to exchange information regarding customer-specific preferences (symmetric preference recognition). Consumers would benefit from a policy panning information exchange regarding individual consumer preferences. Our welfare analysis shows that the gains to firms from uniform pricing (no recognition) are larger than the associated harm to consumers, regardless of which regime of customer recognition serves as the basis for comparison.
    Keywords: Consumers' preferences
    Date: 2011
  2. By: Jose Luis Moraga-Gonzalez (ICREA, IESE Business School, and University of Groningen); Matthijs R. Wildenbeest (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Web search technologies are fundamental tools to easily navigate through the huge amount of information available in the Internet. One particular type of search technologies are the so- called shopbots, or comparison sites. The emergence of Internet shopbots and their implications for price competition and market efficiency are the focus of this chapter. We develop a simple model where a price comparison site tries to attract (possibly vertically and horizontally differentiated) online retailers on the one hand, and consumers on the other hand. The analysis of the model reveals that differentiation among the products of the retailers as well as their ability to price discriminate between on- and off-comparison-site consumers play a critical role. When products are homogeneous, if online retailers cannot charge different on- and off-the-comparison- site prices, then the comparison site has incentives to charge fees so high that some firms are excluded, which generates price dispersion and an inefficient outcome. By contrast, when on- and off-comparison-site prices can be different, the comparison site attracts all the players to the platform and the allocation is efficient. A similar result obtains when products are horizontally differentiated. In that case, the comparison site becomes an aggregator of product information and no matter whether firms can price discriminate or not, the comparison site attracts all the players to the platform and an efficient outcome ensues. We argue that the lack of vertical product differentiation may also be critical for this efficiency result. In fact, we show that when quality differences are large, the comparison site may find it profitable to charge fees such that low quality producers are excluded, thereby inducing an inefficient outcome.
    JEL: L0
    Date: 2011–05
  3. By: Ulrich Witt; Julia Sophie Woersdorfer
    Abstract: How can economic theory explain the reasons why consumers adopt innovations? Using the example of innovations in washing machines two approaches are compared. The first focuses in the manner of household production theory on changes in constraints without specifying preferences, leading to the well-known time substitution hypothesis. The second approach develops specific hypotheses about consumer preferences and focuses on how technical change accounts for them. The two approaches are empirically evaluated with a data set representing the motives suggested in washer advertisements for purchasing new vintages of machines over the period 1888 to 1989 in the U.S.
    Keywords: home production, preferences, consumer motivation, product innovation, innovation diffusion, time substitution hypothesis, direct utility Length 30 pages
    JEL: A12 D01 D11 D12 D13 N3
    Date: 2011–07
  4. By: Revoredo-Giha, Cesar; Watts, D; Leat, Philip M.K.
    Abstract: Local food and its possibilities for addressing sustainable regional growth, food availability, accessibility and affordability has received considerable attention in the discussion on and development of the National Food Policy in Scotland. In terms of methodology, the paper continues the analysis of the local food database for Scotland constructed in Watts et al (2010) by exploring the marketing outlets used by the local food enterprises. This subject is important because it may provide information about the degree of entrepreneurship of the involved firms.
    Keywords: Local food, Scotland, marketing outlets, Marketing,
    Date: 2010–10
  5. By: Sapi, Geza; Suleymanova, Irina
    Abstract: We develop a duopoly model with advertising supported platforms and analyze incentives of a superior firm to license its advanced technologies to an inferior rival. We highlight the role of two technologies characteristic for media platforms: The technology to produce content and to place advertisements. Licensing incentives are driven solely by indirect network effects arising fromthe aversion of users to advertising. We establish a relationship between licensing incentives and the nature of technology, the decision variable on the advertiser side, and the structure of platforms' revenues. Only the technology to place advertisements is licensed. If users are charged for access, licensing incentives vanish. Licensing increases the advertising intensity, benefits advertisers and harms users. Our model provides a rationale for technology-based cooperations between competing platforms, such as the planned Yahoo-Google advertising agreement in 2008. --
    Keywords: Technology Licensing,Two-Sided Market,Advertising
    JEL: L13 L24 L86 M37
    Date: 2011
  6. By: Marco Cornia; Kristopher S. Gerardi, Adam Hale Shapiro; Adam Hale Shapiro (Bureau of Economic Analysis)
    Abstract: We analyze price dispersion in the airline industry in order to determine the e®ects of the business cycle on markup variations. We ¯nd that the cycle can a®ect the degree to which airlines can price discriminate between di®erent consumer types, ultimately a®ecting the degree of price dispersion. Performing a ¯xed-e®ects panel analysis on 17 years of data covering two business cycles, we ¯nd that price dispersion is highly procyclical. Estimates show that a rise in the output gap of one percentage point increases the interquartile range by 1.6 percent. These results suggest that markups move procyclically in the airline industry, such that during booms in the cycle, the ¯rm can signi¯cantly raise the markup charged to those with high willingness to pay. Our analysis suggests that this impact on the ¯rm's ability to price discriminate imposes extra pro¯t risk to the ¯rm over and above cost variations.
    JEL: E60
    Date: 2010–11
  7. By: Sabatini, Fabio
    Abstract: This paper presents the first empirical investigation into the effect of e-shopping on subjective well-being. The analysis relies on an Italian nationally and regionally representative dataset from Italy (n = 4,130) drawn from the 2008 wave of the Survey of Household Income and Wealth (SHIW) carried out by the Bank of Italy. Probit, OLS regressions and instrumental variables estimates show that e-shopping is strongly and positively associated with subjective well-being.
    Keywords: happiness; subjective well-being; Internet; business-to-consumer e-commerce; B2C; e-shopping; instrumental variables; Italy
    JEL: I31 E2 Z19 L86
    Date: 2011–07–24
  8. By: Matthew J Osborne; Nathan H. Miller (Bureau of Economic Analysis)
    Abstract: We develop an estimator for models of competition among spatially differentiated firms. In contrast to existing methods (e.g., Houde (2009)), the estimator has flexible data requirements and is implementable with data that are observed at any level of aggregation. Further, the estimator is the first to be applicable to models in which firms price discriminate among consumers based on location. We apply the estimator to the portland cement industry in the U.S. Southwest over 1983-2003. We estimate transportation costs to be $0.30 per tonne-mile and show that, given the topology of the U.S. Southwest, these transportation costs permit more geographically isolated plants to discriminate among consumers. We conduct a counterfactual experiment and determine that disallowing this spatial price discrimination would increase consumer surplus by $12 million annually, relative to a volume of commerce of $1.3 billion. Heretofore it has not been possible examine the surplus implications of spatial price discrimination in specific, real-world settings; these implications have been known to be ambiguous theoretically since at least Gronberg and Meyer (1982) and Katz (1984). Additionally, our methodology can be used to construct transportation margins, which are an important component of input-output tables.
    JEL: E60 C51 L11 L40 L61
    Date: 2011–04
  9. By: Reimer, Kerstin; Becker, Jan U.
    Abstract: For the past decade, customer relationship management (CRM) has been one of the priorities in marketing research and practice. However, many of the CRM systems did not perform as the companies expected. As such shortcoming could be due to inappropriate data input, this study provides a comprehensive overview of the empirical CRM literature. Along the phases of the CRM process, the authors show which kind of data has successfully proven to achieve the CRM objectives. The study provides researchers with a review of the empirical research on CRM and allows practitioners insights on the usability of customer data for CRM. --
    Keywords: Customer Relationship Management (CRM),Customer Data
    JEL: M31
    Date: 2011–07–25
  10. By: A. Blasco; P. Pin; F. Sobbrio
    Abstract: This paper analyzes a two-sided market for news where advertisers may pay a media outlet to conceal negative information about the quality of their own product (paying positive to avoid negative) and/or to disclose negative information about the quality of their competitors' products (paying positive to go negative). We show that whether advertisers have negative consequences on the accuracy of news reports or not ultimately depends on the extent of correlation among advertisers' products. Specifically, the lower the correlation among the qualities of the advertisers' products, the (weakly) higher the accuracy of the media outlet' reports. Moreover, when advertisers' products are correlated, a higher degree of competition in the market of the advertisers' products may decrease the accuracy of the media outlet's reports.
    JEL: L82 D82
    Date: 2011–07

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