nep-mkt New Economics Papers
on Marketing
Issue of 2011‒11‒01
eight papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Exploding Offers and Buy-Now Discounts By Mark Armstrong; Jidong Zhou
  2. Bundling Revisited: Substitute Products and Inter-Firm Discounts By Mark Armstrong
  3. Marketing Loans and Ldps By Edwards, William; Hofstrand, Donald
  4. The Impact of Information on the Willingness-to-Pay for Labeled Organic Food Products By Sandra Rousseau; Liesbet Vranken;
  5. Measuring Power and Satisfaction in Societies with Opinion Leaders: Dictator and Opinion Leader Properties By René Van Den Brink; Agnieszka Rusinowska; Frank Steffen
  6. Do Exclusivity Arrangments Harm Consumers? By Jihui Chen
  7. Assessing Unilateral Merger Effects in a Two-Sided Market: An Application to the Dutch Daily Newspaper Market By Lapo Filistrucchi; Tobias J. Klein; Thomas Michielsen
  8. RSC y la Cooperación Internacional al Desarrollo: buscando la colaboración estratégica By Rafael Domínguez Martín

  1. By: Mark Armstrong; Jidong Zhou
    Abstract: A common sales tactic is for a seller to encourage a potential customer to make her purchase decision quickly, before she can investigate rival deals in the market. We consider a market with sequential consumer search in which firms can achieve this either by making an exploding offer (which permits no return once the consumer leaves) or by offering a buy-now discount (which makes the price paid for immediate purchase lower than the regular price). We show that firms often have an incentive to use these sales techniques, regardless of their ability to commit to their selling policy. We examine the impact of these sales techniques on market performance. Inducing consumers to buy quickly not only reduces the quality of the match between consumers and products, but may also raise market prices.
    Keywords: Consumer search, Oligopoly, Price discrimination, High-presure selling, Exploding offers, Buy-now discounts, Costly recall
    JEL: D18 D83 L13
    Date: 2011
  2. By: Mark Armstrong
    Abstract: This paper extends the standard model of bundling to allow products to be substitutes and for products to be supplied by separate sellers. Whether integrated or separate, firms have an incentive to introduce a bundling discount when demand for the bundle is elastic relative to demand for stand-alone products. When products are partial substitutes, this typically gives an integrated firm a greater incentive to offer a bundle discount (relative to the standard model with additive preferences), while product substitutability is often the sole reason why separate sellers wish to offer inter-firm discounts. When separate sellers negotiate their inter-firm discount, they can use the discount to relax competition.
    Keywords: Bundling, Price discrimination, Oligopoly, Collusion
    JEL: L11 L13 L42
    Date: 2011
  3. By: Edwards, William; Hofstrand, Donald
    Date: 2011–10–21
  4. By: Sandra Rousseau; Liesbet Vranken;
    Abstract: Organic labels potentially play an important role in shaping consumer preferences for organic food products. Information implied by the presence of labels can be used by consumers to facilitate their consumption decisions. Therefore, we investigate the influence of the provision of objective information on the willingness-to-pay of consumers for labeled organic apples in Flanders (Belgium). Initially, we find that Flemish consumers are willing to pay a positive price premium of approximately 33 eurocent per kilogram for labeled organic apples. After the provision of information on the actual environmental and health effects of organic apple production, this price premium becomes even more pronounced and amounts to approximately 56 eurocent per kilogram.
    Keywords: organic food production, willingness-to-pay, choice experiment, role of information
    JEL: Q01 Q51 D12
    Date: 2011
  5. By: René Van Den Brink (Department of Econometrics - Timbergen Institute - VU University); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Frank Steffen (University of Liverpool Management School (ULMS) - University of Liverpool Management School)
    Abstract: A well known and established model in communication policy in sociology and marketing is that of opinion leadership. Opinion leaders are actors in a society who are able to affect the behavior of other members of the society called followers. Hence, opinion leaders might have a considerable impact on the behavior of markets and other social agglomerations being made up of individual actors choosing among a number of alternatives. For marketing or policy purposes it appears to be interesting to investigate the effect of different opinion leader-follower structures in markets or any other collective decision-making situations in a society. We study a two-action model in which the members of a society are to choose one action, for instance, to buy or not to buy a certain joint product, or to vote yes or no on a specific proposal. Each of the actors has an inclination to choose one of the actions. By definition opinion leaders have some power over their followers, and they exercise this power by influencing the behavior of their followers, i.e. their choice of action. After all actors have chosen their actions, a decision-making mechanism determines the collective choice resulting out of the individual choices. Making use of bipartite digraphs we introduce novel satisfaction and power scores which allow us to analyze the actors' satisfaction and power with respect to the collective choice for societies with different opinion leader-follower structures. Moreover, we study common dictator and opinion leader properties of the above scores and illustrate our findings for a society with five members.
    Keywords: Bipartite digraph ; influence ; inclination ; collective choice ; opinion leader ; follower ; satisfaction ; power ; dictator properties ; opinion leader properties
    Date: 2011
  6. By: Jihui Chen (Department of Economics, Illinois State University; Department of Strategy and Policy, National University of Singapore)
    Abstract: This paper explores welfare implications of exclusivity arrangements, e.g. iPhone?s part- nership with wireless carriers. Two ?rms compete in a primary good market, while a monop- olistic ?rm o¤ers a value-adding good. The primary good can be consumed alone, while the value-adding good must be consumed with the primary good. The monopolistic ?rm forms an exclusivity partnership with one of the primary good providers. Buyers are able to consume the value-adding good only if they patronize the monopolistic ?rm?s exclusive partner. This practice allows the monopolistic ?rm to extract surplus from the primary good market. Sur- prisingly, consumers bene?t from the exclusivity arrangement. However, overall social welfare declines, despite improvements to consumer welfare.
    Keywords: exclusivity, consumer welfare, market efficiency, hotelling
    JEL: L1 L2 L4 L5
    Date: 2011–10
  7. By: Lapo Filistrucchi (Università degli Studi di Firenze,); Tobias J. Klein (Tilburg University); Thomas Michielsen (Tilburg University)
    Abstract: We compare different methods to assess unilateral merger effects in a two-sided market by applying them to a hypothetical merger in the Dutch newspaper industry. For this, we first specify and estimate a structural model of demand for differentiated products on both the readership and the advertising side of the market. This allows us to recover price elasticities and indirect network effects. Following Filistrucchi, Klein, and Michielsen (2010) marginal costs are then recovered from an oligopoly model of the supply side. We use these estimates of price elasticities, network effects and marginal costs to compare different methods that can be used to evaluate merger effects: We perform a concentration analysis based on the Herfindahl Hirschmann Index, a Small Significant Non-Transitory Increase in Price test, measure Upward Pricing Pressure, and conduct a full merger simulation.
    Keywords: Two-sided markets, newspapers, advertising, network effects, merger simulation, SSNIP, UPP, HHI.
    JEL: L13 L40 L82
    Date: 2011
  8. By: Rafael Domínguez Martín (Cátedra de Cooperación Internacional y con Iberoamérica (COIBA), Universidad de Cantabria)
    Abstract: En este trabajo se aborda la relación entre el tercer pilar de la Responsabilidad Social Corporativa (RSC para el desarrollo) y la Cooperación Internacional para el Desarrollo (CID). Para ello se trazan los paralelismos entre la RSC, como estrategia empresarial, y la CID, como política pública concertada, en cuanto a su naturaleza e influencias doctrinales, objetivos, eficiencia/eficacia, críticas, principales problemas de identidad y retos respectivos, a partir de la siguiente hipótesis de trabajo: la RSC es a las empresas lo que la CID es a los gobiernos. A continuación se compara la filantropía corporativa y sus ideologías de acompañamiento (el filantrocapitalismo y el Consenso de California) con la RSC para el desarrollo y su ayuda corporativa, cuyos límites sugieren la necesidad de trascender las operaciones de marketing - tendentes a la consecución de la licencia social para operar hacia una RSC estratégica que promueva el capitalismo inclusivo de la base de la pirámide. El ensayo termina con unas breves consideraciones finales que subrayan el potencial de combinar la RSC estratégica con una CID que vaya más allá de la ayuda y busque la coherencia de políticas.
    Keywords: RSC, cooperación internacional para el desarrollo, ayuda, interdependencia, coherencia de políticas.
    Date: 2010–12

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