nep-mkt New Economics Papers
on Marketing
Issue of 2013‒04‒20
four papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. Search Advertising By Alexandre de Cornière
  2. Online Advertising and Privacy By Alexandre de Cornière; Romain De Nijs
  3. Internationalization strategies of luxury firms in China: the role of design and marketing capabilities By Marco Bettiol; Maria Chiarvesio; Eleonora Di Maria; Raffaella Tabacco
  4. News Aggregators and Competition Among Newspapers in the Internet By Esfahani, Nikrooz; Jeon, Doh-Shin

  1. By: Alexandre de Cornière
    Abstract: Search engines enable advertisers to target consumers based on the query they have entered.  In a framework with horizontal product differentiation, imperfect product information and in which consumers incur search costs, I study a game in which advertisers have to choose a price and a set of relevant keywords.  The targeting mechanism brings about three kinds of efficiency gains, namely lower search costs, better matching, and more intense product market price-competition.  A monopolistic search engine charges advertisers too high a price, and has incentives to provide a suboptimal matching quality.  Competition among search engines eliminates the latter distortion, but exacerbates the former.
    Keywords: Search engine, targeted advertising, consumer search
    JEL: D43 D83 L13 M37
    Date: 2013–03–20
  2. By: Alexandre de Cornière; Romain De Nijs
    Abstract: An online platform makes a profit by auctioning an advertising slot that appears whenever a consumer visits its website.  Several firms compete in the auction, and consumers differ in their preferences.  Prior to the auction, the platform gathers data which is statistically correlated with consumers' tastes for products.  We study the implications of the platform's decision to allow potential advertisers to access the data about consumers' characteristics before they bid.  On top of the familiar trade-off between rent extraction and efficiency, we identify a new trade-off: the disclosure of information leads to a better matching between firms and consumers, but results in a higher equilibrum price on the product market.  We find that the equilbrium price is an increasing function of the number of firms.  As the number of firms becomes large, it is always profitable for the platform to disclose the information, but this need not be efficient, because of the distortion caused by the higher prices.  When the quality of the match represents vertical shifts in the demand function, we provide conditions under which disclosure is optimal.
    Keywords: Online advertising, privacy, information disclosure, auctions
    JEL: D4
    Date: 2013–03–22
  3. By: Marco Bettiol (University of Padova); Maria Chiarvesio (University of Udine); Eleonora Di Maria (University of Padova); Raffaella Tabacco (University of Udine)
    Abstract: Studies on emerging markets depicted the economic, social and institutional peculiarities of those markets by emphasizing opportunities and threats for Western companies. China in particular offers growing market chances, even for luxury firms. On the on hand, studies emphasize the global approach to markets in luxury. On the other hand, the uncertainty and cultural distance characterizing the Chinese market increase the risks of a firm's standardized strategy. The paper aims at investigating internationalization strategies of luxury firms in China by exploring the role of design and marketing capabilities, based on the case study of an Italian company - Bisazza. Results highlight the success of a global design-driven brand strategy, but also the need of adapting the distribution and product management to cope with the Chinese context.
    Date: 2013–02
  4. By: Esfahani, Nikrooz (TSE); Jeon, Doh-Shin (TSE)
    Abstract: We study how the presence of a news aggregator affects quality choices of newspapers competing on the Internet. To provide a microfoundation for the role of the aggregator, we build a model of multiple issues where each newspaper chooses quality on each issue. This model captures the "business-stealing effect" and the "readership expansion effect" of the aggregator. We find that the presence of the aggregator leads newspapers to specialize in news coverage, changes quality choices from strategic substitutes to strategic complements and is likely to increase the quality of newspapers and social welfare, with an ambiguous effect on newspapers’ profits.
    Keywords: Newspapers, News Aggregator, Internet, Quality, Strategic Substitutes, Strategic Complements, Advertising, Business-stealing, Readership expansion, Opting Out.
    JEL: D21 D43 L13 L82
    Date: 2013–04–01

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