nep-mkt New Economics Papers
on Marketing
Issue of 2013‒01‒19
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Externalities Social Value and Word of Mouth By Pier-Andre Bouchard St-Amant
  2. Sales Talk, Cancellation Terms, and the Role of Consumer Protection By Roman Inderst; Marco Ottaviani
  3. Free can catch me: empirical studies on the effects of premium and free-trial promotions on consumer behavior. By Rolef, Charlotte
  4. Consumers behavior of Portuguese wine By Vitor Joao Pereira Domingues Martinho

  1. By: Pier-Andre Bouchard St-Amant (Queen s University)
    Abstract: I examine an environment where advertisers can "seed" word-of-mouth advertising by providing initial information about a product to specific users of a social network. Discussion over a social network generates spillover effects for firms when consumers can use the social network to inform each other about products. When a firm can exploit a social network's structure, it can increase its sales. However, when the network formation process is costly, firms free-ride on such costs at the expense of agents on the network. If agents can form coalitions, I show that they can recoup the value of this externality by charging a toll. When users actively modify the information, generating word-of-mouth advertising about a product provides a "social value." This social value stems from the discussions that agents have about the product, without any intervention. Since this process occurs regardless of the firm's actions, the firm cannot capture such valuation. The opinion leaders, or highly regarded agents on the network, play a key role in the formation of this social value.
    Keywords: Network, Word of Mouth, Externalities, Social Value
    JEL: D83 D85
    Date: 2013–01
  2. By: Roman Inderst; Marco Ottaviani
    Abstract: This paper analyses contract cancellation and product return policies in markets in which sellers advise customers about the suitability of their offering. When customers are fully rational, it is optimal for sellers to offer the right to cancel or return on favorable terms. A generous return policy makes the seller's "cheap talk" at the point of sale credible. This observation provides a possible explanation for the excess refund puzzle and also has implications for the management of customer reviews. When customers are credulous, instead, sellers have an incentive to set unfavorable terms to exploit the inflated beliefs they induce in their customers. The imposition of a minimum statutory standard improves welfare and consumer surplus when customers are credulous. In contrast, competition policy reduces contractual inefficiencies with rational customers, but it is not effective with credulous customers. Keywords: Cheap talk, advice, marketing, credulity, contract cancellation, refund, return policy, consumer protection. JEL Classi?cation: D18 (Consumer Protection), D83 (Search; Learning; Information and Knowledge), L15 (Information and Product Quality), L51 (Economics of Regulation).
    Date: 2012
  3. By: Rolef, Charlotte (Maastricht University)
    Date: 2012
  4. By: Vitor Joao Pereira Domingues Martinho
    Abstract: There are few papers about the consumption pattern of the Portuguese wine, using econometrics techniques. This work, pretend to analyze the consumers behavior of the wine produced in Portugal, determining the demand equation with panel data methods. There were used statistical data available in the Alentejo Regional Winegrowing Commission (CVRA) website. These data were obtained from a study about the market analysis, made, in 2009, by the A.C. Nielsen. The data are disaggregated by region and type of wine (Doc Verde+Regional Minho, Doc Regiao do Douro+Regional Terras Durienses, Doc Regiao da Bairrada+Regional Beiras, Doc Regiao do Dao+Regional Beiras, Doc da Regiao de Lisboa+Regional de Lisboa, Doc da Regiao do Tejo+Regional do Tejo, Doc da Regiao de Setubal+Regional Terras do Sado, Doc Alentejo+Regional Alentejano e Doc da Regiao do Algarve+Regional do Algarve), year (2008 and 2009) and by form of consumption (take home, direct consumption and discount). This work found some linear regularity in the consumers behavior of the Portuguese wine.
    Date: 2012–12

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