nep-mkt New Economics Papers
on Marketing
Issue of 2013‒09‒26
six papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

  1. The Impact of the Internet on Advertising Markets for News Media By Susan Athey; Emilio Calvano; Joshua Gans
  2. Competing for Consumer Inattention By Geoffroy De Clippel; Kfir Eliaz; Kareen Rozen
  3. Effects of Increased Variety on Demand, Pricing, and Welfare By William Horrace; Rui Huang; Jeffrey M. Perloff
  4. The role of consumers in the transition towards sustainability. The case of food supply By Filippo Randelli
  6. The Limits of Price Discrimination By Dirk Bergemann; Benjamin A. Brooks; Stephen Morris

  1. By: Susan Athey; Emilio Calvano; Joshua Gans
    Abstract: In this paper, we explore the hypothesis that an important force behind the collapse in advertising revenue experienced by newspapers over the past decade is the greater consumer switching facilitated by online consumption of news. We introduce a model of the market for advertising on news media outlets whereby news outlets are modeled as competing two-sided platforms bringing together heterogeneous, partially multi-homing consumers with advertisers with heterogeneous valuations for reaching consumers. A key feature of our model is that the multi-homing behavior of the advertisers is determined endogenously. The presence of switching consumers means that, in the absence of perfect technologies for tracking the ads seen by consumers, advertisers purchase wasted impressions: they reach the same consumer too many times. This has subtle effects on the equilibrium outcomes in the advertising market. One consequence is that multi-homing on the part of advertisers is heterogeneous: high-value advertisers multi-home, while low- value advertisers single-home. We characterize the impact of greater consumer switching on outlet profits as well as the impact of technologies that track consumers both within and across outlets on those profits. Somewhat surprisingly, superior tracking technologies may not always increase outlet profits, even when they increase efficiency. In extensions to the baseline model, we show that when outlets that show few or ineffective ads (e.g. blogs) attract readers from traditional outlets, the losses are at least partially offset by an increase in ad prices. Introducing a paywall does not just diminish readership, but it furthermore reduce advertising prices (and leads to increases in advertising prices on competing outlets).
    JEL: L11 L13 L82
    Date: 2013–09
  2. By: Geoffroy De Clippel; Kfir Eliaz; Kareen Rozen
    Date: 2013–09–19
  3. By: William Horrace (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244-1020); Rui Huang (Department of Agricultural & Resrouce Economics, University of Connecticut, Storrs, CT 06269-4021); Jeffrey M. Perloff (Department of Agricultural and Resource Economics, 207 Giannini Hall, MC 3310, University of California, Berkeley, CA 94720)
    Abstract: We use order statistics to analytically derive demand functions when consumers choose from among the varieties of two brands—such as Coke and Pepsi—and an outside good. Soft-drinks have no price variability across varieties within a brand, so traditional demand systems (e.g., mixed logit) are not identified. In contrast, our demand system is identified and can be estimated using a nonlinear instrumental variable estimator. Our demand functions are higher-order polynomials, where the polynomial order is increasing in variety. Because these demand curves have convex and concave sections around an inflection point, firms are more likely to respond and make large price adjustments to increases in cost than to comparable decreases in costs. We compare the profit-maximizing number of varieties within a grocery store to the socially optimal number and find that consumer surplus and welfare would increase with more variety. Key Words: Varieties, Product Line, Consumer Surplus, Welfare, Demand, Order Statistics JEL No. L11, L66, D11
  4. By: Filippo Randelli (Università degli Studi di Firenze)
    Abstract: The so called “socio-technical transitions” is driven by actors such as firms and industries, policy makers and politicians, consumers, civil society, engineers and researchers. This paper addresses the role of consumers in the transition process and their interaction with the established socio-technical (ST) regime. Then the questions that it follows to answer are: do the consumers can address for changes in the established regime? Which are the mechanisms hindering a transition driven by consumers? Is there a consumer innovation life cycle? The emergence of new designs in the established food supply ST regime will be used as an empirical test case. The conceptual framework enriches the multi-level perspective with insights from organization studies, both in industrial and social organization research field. The growing dissatisfaction for the established food supply, dominated by the duopoly supermarket-global food supplier, has driven few pioneers to search for new designs. To point out this innovative process of “bottom-up” innovation into the food supply regime, a case study is presented. The case of Italy illustrates several important consumer-related aspects of innovations and their influence on the established regime. In order to disclose the mechanisms moving forward the process of change in the food supply network, a number of questionnaires was submitted to informal network of consumers. Furthermore, in order to trace how consumers innovation in the food supply may evolve over time we propose a model which consists of four different phases drawn on the answers to the fifth question in the questionnaire (Past trajectories and future development).
    Keywords: food supply, consumer innovation, multi-level perspective, informal local networks
    JEL: D10 O31 Q18
    Date: 2013
  5. By: Edoardo Marcucci (Università degli Studi di Roma Tre)
    Abstract: This paper reviews a set of articles, based on stated preferences techniques, focusing on logistics managers' preferences for freight transport attributes with the intent of assessing the quality of knowledge applied research has produced, its reliability and transferability. Transport choices are relevant in a globalized economy where aggressive marketing strategies are often used to acquire a competitive advantage in the market. Freight transport modeling has been derived out of the classical four step approach developed for passenger transport. A new behavioral approach is progressively gaining popularity thanks to the specific behavioral focus it is based upon. The review performed indicates that there are some evident shortcomings in the way research has been performed so far but, at the same time, there is also a high potential if corrective actions are taken. In particular substantial improvements could be obtained by: 1) clearly defining research and reporting protocols; 2) define and circumscribe who has to be interviewed in the different freight contexts studied; 3) reporting the contractual relationships governing freight movements; 4) reporting freight details (e.g. volume, value, weight); 5) motivating the attribute selection method used. In summary, there is a need for systematizing the procedures and reporting adopted in applied research by introducing a much higher level of detail and rigor in both defying the object of measurement as well in the experimental design protocols employed.
    Keywords: Transport demand, Stated Preferences, Logistics.
    Date: 2013
  6. By: Dirk Bergemann; Benjamin A. Brooks; Stephen Morris
    Date: 2013–09–19

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