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

  1. Competitive Targeted Advertising with Price Discrimination By Rosa Branca Esteves; Joana Resende
  3. Optimal Generic Advertising under Bilateral Imperfect Competition between Processors and Retailers By Chung, Chanjin; Eom, Young Sook; Yang, Byung Woo; Han, Sungill
  4. Competition for Attention By Pedro Bordalo; Nicola Gennaioli; Andrei Shleifer
  5. Assessing Korean Consumers’ Valuation for BSE Tested and Country of Origin Labeled Beef Products By Lee, Sang Hyeon; Lee, Ji Yong; Han, Doo Bong; Nayga, Rodolfo M. Jr
  6. Music consumption at the dawn of the music industry: the rise of a cultural fad By Guerzoni, Marco; Nuccio, Massimiliano
  7. Welfare-increasing third-degree price discrimination By Simon GB Cowan
  8. Determinants of Fresh Vegetable, Fresh Fruit and Peanut Products Expenditure in Urban Households in Ghana By Meng, Ting; Florkowski, Wojciech J.; Sarpong, Daniel; Resurreccion, Anna V. A.; Chinnan, Manjeet
  9. Modeling Unobserved Consumer Heterogeneity in Experimental Auctions: A Censored Random Parameters Approach By Collart, Alba J.; Palma, Marco A.
  10. Antecedents of customer loyalty in medical tourism By Panchapakesan, P.

  1. By: Rosa Branca Esteves (Universidade do Minho - NIPE); Joana Resende (Universidade do Porto - FEP)
    Abstract: This paper investigates the effects of price discrimination by means of targeted advertising in a duopolistic market in which advertising plays two major roles. It transmits relevant information to otherwise uninformed consumers and it acts as a price discrimination device. We look at the …firms' optimal advertising and pricing decisions in two settings, namely mass advertising/non-discrimination strategies and targeted advertising/price discrimination strategies. In the case of targeted advertising, we show that …firms advertise more in its weak market than in its strong market. The analysis highlights that targeted advertising might constitute a tool to dampen price competition. We show that average prices with mass advertising/non-discrimination can be below those with targeted advertising/price discrimination (regardless of the market segment). We also fi…nd that, when advertising costs are not too high, price discrimination by means of targeted advertising can boost industry pro…fits at the expense of consumer and overall welfare. Finally, we show that overall welfare and consumer surplus falls when …firms use targeted advertising instead of mass advertising.
    Date: 2013
  2. By: Michela Ponzo; Vincenzo Scoppa (Dipartimento di Scienze Economiche, Statistiche e Finanziarie, Università della Calabria)
    Abstract: Product quality is often unobservable ex-ante and consumers rely on experts’ judgments, sometimes coming under the form of ratings or awards. Do awards affect consumers’ choices or they are conferred to the most popular products? To disentangle this issue, we use data of the most important Italian Literary Prize, the “Strega Prize”, undertaking two different estimation strategies to evaluate the impact on book sales of being awarded the Prize. First, we adopt a Regression Discontinuity Design using as dependent variable a measure of book sales and as forcing variable (proxying for intrinsic book quality) the jury votes received by each nominated book in the competition. We find a very strong impact of the Strega Prize on sales. Second, using weekly data on appearances in bestseller lists, we estimate a difference-in-differences model, comparing sales performance of treated and control books before the award is conferred with their respective performance afterwards. The results confirm a huge influence of the Prize on book sales and show that most of the impact occurs in the weeks following the announcement.
    Keywords: Cultural Economics, Awards, Literary Prize, Book Sales, Product Quality, Regression Discontinuity Design, Difference-in-Differences model
    JEL: Z10 Z11 L15 L80 M30 D12
    Date: 2013–05
  3. By: Chung, Chanjin; Eom, Young Sook; Yang, Byung Woo; Han, Sungill
    Abstract: The purpose of this paper is to examine the impact of bilateral imperfect competition between processors and retailers and of import supply on optimal advertising intensity, advertising expenditures, and checkoff assessment rates. First, comparative static analyses were conducted on the newly developed optimal advertising intensity formula. Second, to consider the endogenous nature of optimal advertising, a linear market equilibrium model was developed and applied to the U.S. beef industry. Results showed that the full consideration of retailer-processor bilateral market power lowered the optimal values of assessment rates, advertising expenditures, and advertising intensity for the checkoff board while consideration of importers increases the optimal values. The results indicate that ignoring the import sector in optimal generic advertising modeling should underestimate these optimal values, while ignoring the bilateral market power between processors and retailers overestimates the values.
    Keywords: bilateral market power, checkoff, import supply, oligopoly, oligopsony, optimal advertising, processor, retailer, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Industrial Organization, Marketing, L13, L66, M37,
    Date: 2013
  4. By: Pedro Bordalo; Nicola Gennaioli; Andrei Shleifer
    Abstract: We present a model of market competition and product differentiation in which consumers' attention is drawn to the products' most salient attributes. Firms compete for consumer attention via their choices of quality and price. With salience, strategic positioning of each product affects how all other products are perceived. With this attention externality, depending on the cost of producing quality some markets exhibit “commoditized” price salient equilibria, while others exhibit “de-commoditized” quality salient equilibria. When the cost of producing quality changes, innovation can lead to a radical change in markets. In the context of financial innovation, the model generates the well documented phenomenon of “reaching for yield”.
    JEL: D03 D43 L13 M31
    Date: 2013–05
  5. By: Lee, Sang Hyeon; Lee, Ji Yong; Han, Doo Bong; Nayga, Rodolfo M. Jr
    Abstract: The objective of this study is to estimate Korean consumers’ willingness to pay (WTP) for beef products with BSE testing and country of origin labeling. We use a choice experiment to examine consumers’ valuation for beef products with these labels. In addition to analysis using the pooled sample, we also conduct sub-sample analyses based on consumers’ level of risk perception about beef consumption and selected socio-demographic characteristics. Results suggest that Korean consumers value BSE tested beef. They also have a preference for domestic beef vis-à-vis imported beef. When we conducted separate analysis between respondents who have low vs high risk perception about beef consumption, results suggest that those with high risk perception tend to value BSE testing more than country of origin labeling while those with low risk perception value country of origin labeling more than BSE testing. Moreover, results from separate analysis between respondents who have higher education vs lower education and between older vs younger respondents suggest that young or high educated respondents tend to value BSE testing and imported beef from countries which have not experienced BSE outbreaks more than do older or lower educated respondents.
    Keywords: Willingness-to-Pay, BSE test label, Risk Perception, Country of Origin, Choice Experiment, Agricultural and Food Policy, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2013
  6. By: Guerzoni, Marco; Nuccio, Massimiliano (University of Turin)
    Abstract: This paper discusses the extent to which socio-demographic characteristics of consumers and their past consumption are less effective in explaining the decision of purchasing a cultural good than the characteristics of the product itself, which allow imitative behaviors and are at the basis of distinction. While the former approaches are well discussed in the literature, the latter refers to the Bourdieu’s idea of objectified cultural capital, which has been rarely explored in empirical works. Because the various explanatory effects interact with each others, the paper tests a theoretical model which matches individual characteristics of the consumer with the properties of the cultural product. Specifically, we discussed the emergence of a new version of a cultural good, which is able to broaden the dimension of the market by gaining quick success in the the audience. This diffusion pattern is a quite rare event, but disruptive for the market and extremely profitable for the producer. The authors label this occurrence disruptive cultural fad and try to understand the determinants of its adoption. The hypotheses of the model are tested on a unique dataset of micro-data of purchasing transactions in Milan in the early 19th century,when the music by Gioachino Rossini emerged as disruptive cultural fad at the dawn of the music industry
    Date: 2012–09
  7. By: Simon GB Cowan
    Abstract: The welfare and output effects of monopoly third-degree price discrimination are analyzed when inverse demand functions are parallel.  Welfare is higher with discrimination than with a uniform price when demand functions are derived from the logistic distribution, and from a more general class of distributions.  The sufficient condition in Varian (1985) for a welfare increase holds for these demand functions.  Total output is higher with discrimination for a large set of demand functions including those derived from strictly log-concave distributions with increasing cost pass-through, such as the normal, logistic and extreme value, and standard log-convex demands.
    Keywords: Third-degree price discrimination, monopoly, social welfare, output
    JEL: D42 L12 L13
    Date: 2013–04–22
  8. By: Meng, Ting; Florkowski, Wojciech J.; Sarpong, Daniel; Resurreccion, Anna V. A.; Chinnan, Manjeet
    Keywords: Agricultural and Food Policy, Consumer/Household Economics,
    Date: 2013
  9. By: Collart, Alba J.; Palma, Marco A.
    Keywords: Research Methods/ Statistical Methods,
    Date: 2013–05
  10. By: Panchapakesan, P.
    Abstract: With the rise in number of medical travelers exponentially, Indian medical tourism is witnessing a high rate of growth. As many countries are foraying into this promising industry, it is imperative for the medical tourist service providers in India to take cognition of their levels of service in order to meet the expectations of their global consumers. This paper explores the primary antecedents of medical tourists’ loyalty, considering both the functional and the hedonic components of the service. An instrument is also developed to obtain the perceptions of medical tourists as well as to measure the determinants of their loyalty. The major implications of this research are also discussed.
    Keywords: Customer Loyalty, Medical Tourism, Medical Tourist, India
    Date: 2013–05–14

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