nep-mkt New Economics Papers
on Marketing
Issue of 2013‒04‒06
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Creating Attachment through Advertising: Loss Aversion and Pre–Purchase Information By Heiko Karle
  2. Effect of organic contract farming on labor demand. A study case in the Western Uganda By Céline Guimas
  3. Five Misunderstandings About Case-Study Research By Bent Flyvbjerg
  4. Price competition and reputation in credence goods markets: Experimental evidence By Wanda Mimra; Alexander Rasch; Christian Waibel

  1. By: Heiko Karle (ETH Zurich, Switzerland)
    Abstract: Complementing the existing literature on anchoring effects and loss aversion, we analyze how firms can influence loss–averse consumers’ willingness to pay by product information in the form of informative advertising rather than by prices. We find that consumers’ willingness to pay is greatest when only partial information about the product—i.e. only a fraction of product attributes—is disclosed, and that partial information disclosure is the optimal mode of advertising for a monopolistic firm. This causes the consumers’ realized product valuation to diverge from their intrinsic product valuation, which leads to a reduction of consumer surplus. Consequently, transparency policies can help to protect consumers.
    Keywords: Advertising; Loss Aversion; Information Disclosure.
    JEL: D83 L41 M37
    Date: 2013–03
  2. By: Céline Guimas (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne)
    Abstract: For a better understanding of this study, I will explain why organic agriculture offers interesting potential for reducing poverty and why contract farming arrangement can be a successful tool for ful lling this potential. However, in order to fully evaluate the impacts of organic contract farming scheme, it is necessary to evaluate the spillovers on the local community, including people that do not directly participate in such scheme. One of these spillovers is the creation of employment opportunities and this is the focus of this study. An increase in labor demand may limit conversion to organic farming in country where labor supply is scarce. However, in a country like Uganda where rural poor are often underemployed and have no - or too little - land to meet their own needs, job creation is a positive and crucial contribution for poverty alleviation. Hence, if organic contract farming increases labor demand, this deserves to be emphasized. For now, existing literature has never studied this speci c consequence and thus, future research should rigorously quantify this effect on labor demand. My own study, though limited by data availability on farm labor input, is a rst step in this important investigation. I will use a simple farm-household model in order to illustrate how farmers determine their farm labor demand as well as their farm and off-farm labor supply. This model has really modest purposes and aims only to give the main intuition about how the participation in an organic contract farming scheme can modify these decisions. At last, the empirical analysis will provide support for the main hypothesis that is tested: organic contract farming scheme increases the farm labor demand. Yet, results suggest this does not come from more labor intensive organic farm practices but mainly comes from higher price and product quality that are associated with the participation in this organic contract farming arrangement. This study is structured as follows: Section 2 introduces potentials and challenges of organic agriculture and contract farming. Section 3 focuses on Uganda and on potential employment contribution. Section 4 presents the cocoa and vanilla organic contract farming scheme with the exporter Esco (U) Ltd. Section 5 is dedicated to a simple farm-household model. At last section 6 and 7, focus on the empirical investigation and its results.
    Keywords: marché du travail, agriculture biologique, Ouganda
    Date: 2012
  3. By: Bent Flyvbjerg
    Abstract: This article examines five common misunderstandings about case-study research: (1) Theoretical knowledge is more valuable than practical knowledge; (2) One cannot generalize from a single case, therefore the single case study cannot contribute to scientific development; (3) The case study is most useful for generating hypotheses, while other methods are more suitable for hypotheses testing and theory building; (4) The case study contains a bias toward verification; and (5) It is often difficult to summarize specific case studies. The article explains and corrects these misunderstandings one by one and concludes with the Kuhnian insight that a scientific discipline without a large number of thoroughly executed case studies is a discipline without systematic production of exemplars, and that a discipline without exemplars is an ineffective one. Social science may be strengthened by the execution of more good case studies.
    Date: 2013–04
  4. By: Wanda Mimra (ETH Zurich, Switzerland); Alexander Rasch (Universität zu Köln); Christian Waibel (ETH Zurich, Switzerland)
    Abstract: In credence goods markets, experts have better information about the appropriate quality of treatment than their customers. As experts provide both diagnosis and treatment, this leaves scope for fraud. We experimentally investigate how intensity of price competition and the level of customer information about past expert behavior influence an expert’s incentive to defraud his customers when the expert can build up reputation. We show that the level of fraud is significantly higher under price competition than when prices are fixed. The price decline under competitive prices superimposes quality competition. More customer information does not necessarily decrease the level of fraud.
    Keywords: Credence good; Expert; Fraud; Price competition; Reputation; Overcharging; Undertreatment.
    JEL: D82 L15
    Date: 2013–03

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