nep-mkt New Economics Papers
on Marketing
Issue of 2012‒09‒16
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Product quality, competition, and multi-purchasing By Anderson, Simon P.; Foros, Øystein; Kind, Hans Jarle
  2. Upward Pricing Pressure in Two-Sided Markets By Affeldt, P.; Filistrucchi, L.; Klein, T.J.
  3. Consumer Inertia and Firm Pricing in the Medicare Part D Prescription Drug Insurance Exchange By Keith M. Marzilli Ericson
  4. QR Codes Usage Approach In The Virtualized Consumption By Muntean, Mihaela; Mircea, Gabriela; Bazavan, Sandra

  1. By: Anderson, Simon P. (Dept. of Economics, University of Virginia); Foros, Øystein (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Kind, Hans Jarle (Dept. of Economics, Norwegian School of Economics)
    Abstract: In a Hotelling duopoly model, we introduce quality that is more appreciated by closer consumers. Then higher common quality raises equilibrium prices, in contrast to the standard neutrality result. Furthermore, we allow consumers to buy one out of two goods (single-purchase) or both (multi-purchase). Prices are strategically independent when some consumers multi-purchase because suppliers price the incremental benefit to marginal consumers. In a multi-purchase regime, there is a hump-shaped relationship between equilibrium prices and quality when quality functions overlap. If quality is sufficiently good, it might be a dominant strategy for each supplier to price high and eliminate multi-purchase.
    Keywords: Hotelling model with quality; multi-purchase; incremental pricing; content competition
    JEL: D00 D40
    Date: 2012–08–28
  2. By: Affeldt, P.; Filistrucchi, L.; Klein, T.J. (Tilburg University, Center for Economic Research)
    Abstract: 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
  3. By: Keith M. Marzilli Ericson
    Abstract: I use the Medicare Part D prescription drug insurance market to examine the dynamics of firm interaction with consumers on an insurance exchange. Enrollment data show that consumers face switching frictions leading to inertia in plan choice, and a regression discontinuity design indicates initial defaults have persistent effects. In the absence of commitment to future prices, theory predicts firms respond to inertia by raising prices on existing enrollees, while introducing cheaper alternative plans. The complete set of enrollment and price data from 2006 through 2010 confirms this prediction: older plans have approximately 10% higher premiums than comparable new plans.
    JEL: H51 I1 I11 I18 I28 L11 L38 L51
    Date: 2012–09
  4. By: Muntean, Mihaela; Mircea, Gabriela; Bazavan, Sandra
    Abstract: Placed in magazines, newspapers, billboard, subway stations, airports, public places, advertising panels, public or private institutions, QR codes meet an increased popularity by instantly connecting any consumer to details of products, discounts, events, payment and purchasing services or direct access to any web address. All of these aspects already exist in any consumer’s life but in an unstructured process which now can be summarized by a single code scan, using a common camera based device. In this paper we determine whether the massive implementation of QR codes would accelerate virtualized consumption and perform towards profitability as a new strategic resource.
    Keywords: QR code; consumption; barcode; virtualization; market behavior
    JEL: O30 M30 L86 E20
    Date: 2012–02–15

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