nep-mkt New Economics Papers
on Marketing
Issue of 2012‒09‒03
nine papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Upward Pricing Pressure in Two-Sided Markets By Pauline Affeldt; Lapo Filistrucchi; Tobias J. Klein
  2. Suggested retail prices with downstream competition By Simona Fabrizi; Steffen Lippert; Clemens Puppe; Stephanie Rosenkranz
  3. Promotional Reviews: An Empirical Investigation of Online Review Manipulation By Dina Mayzlin; Yaniv Dover; Judith A. Chevalier
  4. Consumers' Imperfect Information and Price Rigidities By Jean-Paul L'Huillier
  5. Sustainable Tourism and the emergence of new Environmental Norms By Malgorzata Ogonowska; Dominique Torre
  6. Impact on retail prices of non-neutral wholesale prices for content providers By Giuseppe D'ACQUISTO; Patrick MAILLÉ; Maurizio Naldi; Bruno Tuffin
  7. A Tear in the Iron Curtain: The Impact of Western Television on Consumption Behavior By Bursztyn, Leonardo; Cantoni, Davide
  8. The Impact of a Public Option in the Health Insurance Market By Barbos, Andrei; Deng, Yi
  9. A Dollar for Your Thoughts: Feedback-Conditional Rebates on eBay By Luis Cabral; Lingfang (Ivy) Li

  1. By: Pauline Affeldt; Lapo Filistrucchi (Università degli Studi di Firenze,); Tobias J. Klein
    Abstract: Pricing pressure indices have recently been proposed as alternative screening devices for horizontal mergers involving differentiated products. We extend the concept of Upward Pricing Pressure (UPP) proposed by Farrell and Shapiro (2010) to two-sided markets. Examples of such markets are the newspaper market, where the demand for advertising is related to the number of readers, and the market for online search, where advertising demand depends on the number of users. The formulas we derive are useful for screening mergers among two-sided platforms. Due to the two-sidedness they depend on four sets of diversion ratios that can either be estimated using market-level demand data or elicited in surveys. In an application, we evaluate a hypothetical merger in the Dutch daily newspaper market. Our results indicate that it is important to take the two-sidedness of the market into account when evaluating UPP.
    Keywords: Merger evaluation, two-sided markets, network effects, UPP.
    JEL: L13 L40 L82
    Date: 2012
  2. By: Simona Fabrizi; Steffen Lippert; Clemens Puppe; Stephanie Rosenkranz
    Abstract: We analyze vertical relationships between a manufacturer and competing retailers when consumers have reference-dependent preferences. Consumers adopt the manufacturer's suggested retail price as their reference price and perceive losses when purchasing above the suggested price and gains when purchasing below it. In equilibrium, retailers undercut price suggestions and the manufacturer suggests a retail price if consumers are sufficiently bargain-loving and perceive retailers as sufficiently undifferentiated. The manufacturer engages in resale price maintenance otherwise. Consumers can be worse off with suggested retail prices than with resale price maintenance, prompting a rethinking of the current legal treatment of suggested retail prices.
    Keywords: suggested or recommended retail prices, resale price maintenance, reference-dependent preferences, vertical restraints, competition law and policy
    JEL: D03 D43 K21 L42
    Date: 2012–08
  3. By: Dina Mayzlin; Yaniv Dover; Judith A. Chevalier
    Abstract: Online reviews could, in principle, greatly improve the match between consumers and products. However, the authenticity of online user reviews remains a concern; firms have an incentive to manufacture positive reviews for their own products and negative reviews for their rivals. In this paper, we marry the diverse literature on economic subterfuge with the literature on organizational form. We undertake an empirical analysis of promotional reviews, examining both the extent to which fakery occurs and the market conditions that encourage or discourage promotional reviewing activity. Specifically, we examine hotel reviews, exploiting the organizational differences between two travel websites:, and While anyone can post a review on Tripadvisor, a consumer could only post a review of a hotel on Expedia if the consumer actually booked at least one night at the hotel through the website. We examine differences in the distribution of reviews for a given hotel between Tripadvisor and Expedia. We argue that the net gains from promotional reviewing are likely to be highest for independent hotels that are owned by single-unit owners and lowest for branded chain hotels that are owned by multi-unit owners. Our methodology thus isolates hotels with a disproportionate incentive to engage in promotional reviewing activity. We show that hotels with a high incentive to fake have a greater share of five star (positive) reviews on Tripadvisor relative to Expedia. Furthermore, we show that the hotel neighbors of hotels with a high incentive to fake have more one and two star (negative) reviews on Tripadvisor relative to Expedia.
    JEL: L1 L15 L83
    Date: 2012–08
  4. By: Jean-Paul L'Huillier (EIEF)
    Abstract: This paper develops a model of price rigidities and information diffusion in decentralized markets with private information. First, I provide a strategic microfoundation for price rigidities, by showing that firms are better off delaying the adjustment of prices when they face a high number of uninformed consumers. Second, in an environment where consumers learn from firms' prices, the diffusion of information follows a Bernoulli differential equation. Therefore, learning follows nonlinear dynamics. Third, the price rigidity produces an informational externality that affects welfare. Fourth, the dynamics of output are hump-shaped due to consumer learning.
    Date: 2012
  5. By: Malgorzata Ogonowska (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université de Nice Sophia Antipolis (UNS)); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université de Nice Sophia Antipolis (UNS))
    Abstract: Since 1990s environmental protection and awareness became major issues. Consumers are more and more aware of environmental issues and conscious of existing pollution caused by mass tourism. Consequently a new segment of demand desiring sustainable tourism products have appeared, enhancing service providers to offer this type of products. This paper analyzes the evolution of service provider's offer adapting to demand preferences modification. Using a theoretical framework, it explains how environmental quality standards can become general norms in tourism industry. By analyzing a case of monopoly and duopoly, it considers different possible frameworks and strategic choices that may be implemented by the incumbent. Though, it explains the role of industry in the emergence of the new environmental norms.
    Keywords: Economics of Tourism, tourism products' distribution, sustainable tourism, branding policies, environmental norms.
    Date: 2012–06–07
  6. By: Giuseppe D'ACQUISTO (Garante per la protezione dei dati personali - Garante per la protezione dei dati personali); Patrick MAILLÉ (RSM - Département Réseaux, Sécurité et Multimédia - Institut Télécom - Télécom Bretagne - Université européenne de Bretagne); Maurizio Naldi (DISP - Dipartimento di Informatica, Sistemi e Produzione [Roma] - Università degli Studi di Roma "Tor Vergata"); Bruno Tuffin (INRIA - IRISA - DIONYSOS - INRIA - Université de Rennes 1)
    Abstract: The impact of wholesale prices is examined in a context where the end customer access both free content and payper-use content, delivered by two different providers through a common network provider. We formulate and solve the game between the network provider and the pay-per-use content provider, where both use the price they separately charge the end customer with as a leverage to maximize their profits. In the neutral case (the network provider charges equal wholesale prices to the two content providers), the benefits coming from wholesale price reductions are largely retained by the pay-peruse content provider. When the free content provider is charged more than its pay-per-use competitor, both the network provider and the pay-per-use content provider see their profit increase, while the end customer experiences a negligible reduction in the retail price.
    Keywords: Network neutrality, Game theory, Pricing
    Date: 2012
  7. By: Bursztyn, Leonardo; Cantoni, Davide
    Abstract: This paper examines the impact of exposure to foreign media on the economic behavior of agents in a totalitarian regime. We study private consumption choices focusing on former East Germany, where differential access to Western television was determined by geographic features. Using data collected after the transition to a market economy, we find no evidence of a significant impact of previous exposure to Western television on aggregate consumption levels. However, exposure to Western broadcasts affects the composition of consumption, biasing choices in favor of categories of goods with high intensity of pre-reunification advertisement. The effects vanish by 1998.
    Keywords: Advertising; Communism; Consumption; East Germany; Media; Television
    JEL: D12 E21 Z10
    Date: 2012–08
  8. By: Barbos, Andrei; Deng, Yi
    Abstract: We develop a game-theoretical model to examine the implications of the introduction of a non-profit "public option" in the U.S. health insurance market, in which a continuum of heterogeneous consumers, each facing unknown medical expenditures and differing in their expectations of such expenditures, have to choose between a profit-maximizing private insurance plan and a social-welfare-maximizing public plan. We then estimate and calibrate the model based on the U.S. data and quantify the Nash equilibrium of the market structure. Empirical results suggest that private insurer will still represent a significant part of the insurance market and generate a substantially positive profit.
    Keywords: Public Option; Health Insurance Markets
    JEL: I11 L32 L21 L10
    Date: 2012–06–15
  9. By: Luis Cabral; Lingfang (Ivy) Li
    Date: 2012

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