nep-mkt New Economics Papers
on Marketing
Issue of 2012‒05‒08
five papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Sales Taxes and Internet Commerce By Liran Einav; Dan Knoepfle; Jonathan D. Levin; Neel Sundaresan
  2. Competition Between Mail and Electronic Substitutes in the Financial Sector: A Hotelling Approach By Cremer, Helmuth; De Donder, Philippe; Dudley, Paul; Rodriguez, Frank
  3. A Model of Recommended Retail Prices By Dmitry Lubensky
  4. The Seller's listing strategy in online auctions: evidence from eBay By Chen, Kong-Pin; Liu, Yu-Sheng; Yu, Ya-Ting
  5. Dynamic Pricing, Advance Sales, and Aggregate Demand Learning in Airlines By Escobari, Diego

  1. By: Liran Einav; Dan Knoepfle; Jonathan D. Levin; Neel Sundaresan
    Abstract: We estimate the sensitivity of Internet retail purchasing to sales taxes using data from the eBay marketplace. Our first approach exploits the fact that seller locations are revealed only after buyers have expressed interest in an item by clicking on its listing. We use millions of location "surprises" to estimate price elasticities with respect to the effective sales tax. We then use aggregated data to estimate cross-state substitution parameters, and substitution between offline and online purchases, relying on the variation in state and local sales taxes, and on changes in these rates over time. We find substantial sensitivity to sales taxes. Using our item-level approach, we find a price elasticity of around -2 for interested buyers. Using our aggregate approach, we find that a one percentage point increase in a state's sales tax increases online purchases by state residents by just under two percent, but decreases their online purchases from home-state retailers by 3-4 percent.
    JEL: D12 H20 H71 L81
    Date: 2012–04
  2. By: Cremer, Helmuth (Toulouse School of Economics (GREMAQ, IDEI and Institut universitaire de France)); De Donder, Philippe (Toulouse School of Economics (GREMAQ-CNRS and IDEI)); Dudley, Paul (Head of Regulatory Economics, Royal Mail Group); Rodriguez, Frank (Associate, Oxera)
    Abstract: We build a model where two banks compete for the patronage of consumers by offering them, among other services and products, two forms of transactional media: paper statements and electronic substitutes. Both banks and both products are horizontally di¤erentiated and modeled à la Hotelling(1929). Assuming symmetry of consumer preferences (over banks and, independently, over the two transactional media) and of bankss costs, we obtain that the unique pro…t-maximizing symmetrical prices reect both the transactional media marginal costs and the intensity of competition between banks. Most notably, the intensity of consumers preferences for one variant of transactional medium over another has no inuence on the pro…t-maximizing media prices. Also, there is total pass-through of increases in input prices (such as mail price for paper statements) into prices paid by …nal consumers.
    Date: 2012–03–13
  3. By: Dmitry Lubensky (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Manufacturers frequently use list prices, suggested retail prices, or other similar forms of non-binding public price recommendations. Despite the prevalence of this practice, why manufacturers make these recommendations and what effect they have on actual prices is still not well understood. I present a model in which price recommendations convey information to consumers about aggregate market conditions. The manufacturer uses recommendations to directly affect consumers' search decisions and thus to indirectly affect the prices set by retailers. The manufacturer faces a tradeoff when influencing search: inducing lower reservation prices reduces retailer markups but also inhibits the manufacturer's ability to extract surplus from consumers with a high willingness to pay. I show that the manufacturer can credibly provide information through cheap talk. Furthermore, I find that a ban on recommendations can be welfare reducing, harming both consumers and the manufacturer. Lastly, I argue that price recommendations are not simply a substitute for price restraints and allow the manufacturer to achieve outcomes that are not attainable with resale price maintenance alone.
    JEL: L0 D83
    Date: 2011–08
  4. By: Chen, Kong-Pin; Liu, Yu-Sheng; Yu, Ya-Ting
    Abstract: The paper empirically studies why the sellers of identical commodities adopt dier- ent auction formats in the online auction, and the consequences thereof. We postulate that the sellers adopt dierent auction formats because of the dierences in their ex- perience and the number of items they have. We rst use these two characteristics to endogeneize the seller's choice between three auction formats: xed-price, buy-it-now (BIN), and pure auctions. We then estimate the dierences in sales rate, transaction price, and sale duration between the three formats. We nd that the xed-price auc- tion results in the highest transaction price and the lowest sale rate, while the pure auction is just the opposite, with the BIN auction falling in between. These results strongly suggest that there is a tradeo between price and sale probability in adopting dierent formats of auctions. We
    Keywords: online auctions; buy-it-now; selling format; listing strategy
    JEL: L81 D44 D02
    Date: 2012–03–27
  5. By: Escobari, Diego
    Abstract: This paper uses a unique U.S. airlines panel data set to empirically study the dynamic pricing of inventories with uncertain demand over a finite horizon. I estimate a dynamic pricing equation and a dynamic demand equation that jointly characterize the adjustment process between prices and sales as the flight date nears. I find that the price increases as the inventory decreases, and decreases as there is less time to sell. Consistent with aggregate demand learning and price adjustment, demand shocks have a positive and much larger effect on prices than the positive effect of anticipated sales.
    Keywords: pricing; demand uncertainty; demand learning; airlines
    JEL: L93 D84 C23 D83
    Date: 2011–12–17

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