nep-mkt New Economics Papers
on Marketing
Issue of 2013‒03‒09
six papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Price Formation in Consumer Markets By Farm, Ante
  2. Digital Content Strategies By Daniel Halbheer; Florian Stahl; Oded Koenigsberg; Donald R. Lehmann
  3. Private Labels and International Trade: Trading Variety for Volume By Emily Blanchard; Tatyana Chesnokova; Gerald Willmann
  4. New and Improved? By Eric Schmidbauer
  5. Comparative versus Informative Advertising in Oligopolistic Markets By Maria Alipranti; Evangelos Mitrokostas; Emmanuel Petrakis
  6. Piracy in a two-sided software market By Rasch, Alexander; Wenzel, Tobias

  1. By: Farm, Ante (Swedish Institute for Social Research, Stockholm University)
    Abstract: .
    Keywords: Pricing; oligopoly; price leadership; market shares; marketing
    Date: 2013–02–05
  2. By: Daniel Halbheer (Department of Business Administration (IBW), University of Zurich); Florian Stahl (Department of Business Administration (IBW), University of Zurich); Oded Koenigsberg (Department of Marketing, London Business School); Donald R. Lehmann (Marketing, Columbia Business School)
    Abstract: This paper studies content strategies for online publishers of digital information goods. It examines sampling strategies and compares their performance to paid content and free content strategies. A sampling strategy, where some of the content is offered for free and consumers are charged for access to the rest, is known as a “metered model” in the newspaper industry. We analyze optimal decisions concerning the size of the sample and the price of the paid content when sampling serves the dual purpose of disclosing content quality and generating advertising revenue. We show in a reduced-form model how the publisher’s optimal ratio of advertising revenue to sales revenue is linked to characteristics of both the content market and the advertising market. We assume that consumers learn about content quality from the free samples in a Bayesian fashion. Surprisingly, we find that it can be optimal for the publisher to generate advertising revenue by offering free samples even when sampling reduces both prior quality expectations and content demand. In addition, we show that it can be optimal for the publisher to refrain from revealing quality through free samples when advertising effectiveness is low and content quality is high.
    Keywords: Information Goods, Sampling, Content Pricing, Advertising, Dorfman-Steiner Condition, Pricing, Product Quality, Bayesian Learning, News Websites
    JEL: L11 L15 L21 M21 M30
    Date: 2013–02
  3. By: Emily Blanchard; Tatyana Chesnokova (School of Economics, University of Adelaide); Gerald Willmann
    Abstract: This paper explores the role of pooled-producer, e.g. private label, trade intermediation n shaping the range and diversity of exports. Direct sales maintain a firm's unique product characteristics (`brand equity'), whereas trade through an intermediary can take two forms--either a wholesaling arrangement that (also) maintains the exporter's unique brand but imposes a higher marginal cost (via double marginalization), or a `private label' contract under which the firm's product is pooled with other rms' output and re-sold under a new private label brand created by the intermediary. This paper focuses on the latter, and shows that the availability of the private label option results in greater total export volumes and lower average prices for consumers, but fewer independent varieties available in equilibrium. Welfare implications are mixed: consumers trade variety for volume, firms face greater competition from the new pooled-products, and intermediaries capture much of the gains from trade.
    Keywords: Private Labels, Export Mode, Intermediaries, Heterogeneous Firms, International Retailers
    JEL: F13 F16 D72 E60
    Date: 2013–02
  4. By: Eric Schmidbauer (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)
    Abstract: Are new versions of products necessarily better? We analyze product innovation by a firm that engages in research and development designed to improve an existing product, the outcome of which is uncertain. If the firm adopts the innovation its modified product appears to consumers as new and improved, but consumers do not immediately know whether or how much the product is better. We find that new products are on average improved and therefore command a pricing premium. This induces some types to exploit the new product signal by selling new versions that are only trivially different from their older version or that require inefficiently high upgrade costs. Nevertheless, the incentive to show off by introducing a new product may improve total welfare by inducing more innovation adoption and thereby mitigating the standard monopoly underinvestment problem. Innovation signaling provides a rational explanation for consumer attraction to new versions of products without resort to behavioral assumptions such as a preference for "newness".
    Keywords: Asymmetric information, Signaling, Innovation
    JEL: L0 D82 O31
    Date: 2013–01
  5. By: Maria Alipranti (University of Crete); Evangelos Mitrokostas (Department of Economics, University of Crete); Emmanuel Petrakis (Department of Economics, University of Crete, Greece)
    Abstract: The present paper examines endogenously the firms ��incentives to invest in informative and comparative advertising, in an oligopolistic market with horizontally differentiated products where competition take place in quantities. We show that, in equilibrium the fi��rms undertake a mix advertising strategy that combines both informative and comparative advertising investments. We further compare our results over the equilibrium market outcomes and the social welfare obtained under the endogenous advertising con��figuration with the benchmark case, without firms' ��advertising activities, and the cases of mere informative and mere comparative advertising. We demonstrate that the equilibrium market outcomes, as well as, the welfare alter signifi��cantly depending on the type(s) of advertising that fi��rms have available in the market and the degree of the market competition.
    Keywords: Informative Advertising, Comparative Advertising, Oligopoly, Product Differentiation.
    JEL: L13 M37
    Date: 2013–02–13
  6. By: Rasch, Alexander; Wenzel, Tobias
    Abstract: This paper studies the impact of software piracy in a two-sidedmarket setting. Software platforms attract developers and users to maximize their profits. The equilibrium price structure is affected by piracy: license fees to developers are higher with more software protection but the impact on user prices is ambiguous. A conflict between platforms and software developers over software protection may arise: whereas one side benefits from better protection, the other party loses out. Under platform compatibility, this conflict is no longer present. --
    Keywords: developer,piracy,platform,software,two-sided markets
    JEL: L11 L86
    Date: 2013

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