nep-mkt New Economics Papers
on Marketing
Issue of 2013‒12‒15
eight papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Deceptive Advertising with Rational Buyers By Giovanni Ursino; Salvatore Piccolo; Piero Tedeschi
  2. Optimal sales schemes for network goods By Alexei Parakhonyak; Nick Vikander
  3. Monopoly price discrimination with constant elasticity demand By Aguirre Pérez, Ignacio; Cowan, Simon George
  4. Consumers' behaviour towards food safety: A litterature review By Maria Aguiar Fontes; Eric Giraud-Héraud; Alexandra Seabra Pinto
  5. The Lure of the Brand: Evidence from the European Mutual Fund Industry By Fabian Irek,; Jan Jaap Hazenberg; Willem van der Scheer; Mariela Stefanova
  6. Internationalization of a Chinese "born glocal" brand: the case of Goodbaby By Francesca Checchinato; Lala Hu; Alessandra Perri; Tiziano Vescovi
  7. Measuring Consumer Preferences for Video Content Provision via Cord-Cutting Behavior By Jeffrey T. Prince; Shane Greenstein
  8. Salience and Consumer Choice By Pedro Bordalo; Nicola Gennaioli; Andrei Shleifer

  1. By: Giovanni Ursino (Università Cattolica del Sacro Cuore); Salvatore Piccolo (Università Cattolica delSacro Cuore di Milano and CSEF); Piero Tedeschi (Università Cattolica del Sacro Cuore)
    Abstract: We study a Bertrand game where two sellers supplying products of different and unverifiable qualities can outwit potential clients through (costly) deceptive advertising. We characterize a class of pooling equilibria where sellers post the same price regardless of their quality and low quality ones deceive buyers. Although in these equilibria low quality goods are purchased with positive probability, the buyer’s (expected) utility can surprisingly be higher than in a fully separating equilibrium, which suggests that (absent price regulation) a per se rule banning deceptive practices may harm consumers. We also argue that sellers invest more in deceptive advertising the better their reputation vis-à-vis potential clients – i.e., firms that are better trusted by customers, have greater incentives to invest in deceptive advertising. Finally, we characterize the optimal monitoring effort exerted by a regulatory agency who seeks to identify and punish deceptive practices. We show that consumer surplus maximization requires a higher monitoring e¤ort than social welfare maximization.
    Keywords: Misleading Advertising, Deception, Bayesian Consumers, Asymmetric Information
    JEL: L13 L15 L4
    Date: 2013–12–10
  2. By: Alexei Parakhonyak (National Research University Higher School of Economics, Moscow, Russia.); Nick Vikander (University of Copenhagen, Department of Economics.)
    Abstract: This paper examines the optimal sequencing of sales in the presence of network externalities. A firm sells a good to a group of consumers whose payoff from buying is increasing in total quantity sold. The firm selects the order to serve consumers so as to maximize expected sales. It can serve all consumers simultaneously, serve them all sequentially, or employ any intermediate scheme. We show that the optimal sales scheme is purely sequential, where each consumer observes all previous sales before choosing whether to buy himself. A sequential scheme maximizes the amount of information available to consumers, allowing success to breed success. Failure can also breed failure, but this is made less likely by consumers’ desire to influence one another’s behavior. We show that when consumers differ in the weight they place on the network externality, the firm would like to serve consumers with lower weights first. Our results suggests that a firm launching a new product should first target independent-minded consumers who can serve as opinion leaders for those who follow.
    Keywords: Product launch, Network externality, Sequencing of sales
    JEL: M31 D42 D82 L12
    Date: 2013
  3. By: Aguirre Pérez, Ignacio; Cowan, Simon George
    Abstract: This paper presents new results on the welfare e¤ects of third-degree price discrimination under constant elasticity demand. We show that when both the share of the strong market under uniform pricing and the elasticity di¤erence between markets are high enough,then price discrimination not only can increase social welfare but also consumer surplus.
    JEL: L12 L13 D42
    Date: 2013–11
  4. By: Maria Aguiar Fontes (CIISA - Faculdade de Medicina Veterinária - Technical University of Lisbon); Eric Giraud-Héraud (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, Institut National de la Recherche Agronomique - Institut national de la recherche agronomique (INRA)); Alexandra Seabra Pinto (UEIS - SAFSV - National Institute for Agrarian and Veterinarian Research I.P.)
    Abstract: This paper deals with the actual expectations of consumers on food safety and their predictable behaviour in case of foodborne outbreaks. We present an overview of the purchase process for risky products and we show the reason why the consumer has a specific behaviour with respect to the sanitary risk. Moreover, by taking the results of different works that focused these effects in the meat and fruit & vegetables sectors, we show how the real quality signals on the European market (organic production, designation of origin, private retail labels, etc.) could promote consumer confidence.
    Keywords: Food Safety, Consumers' Behaviour, Risk
    Date: 2013–12–02
  5. By: Fabian Irek,; Jan Jaap Hazenberg; Willem van der Scheer; Mariela Stefanova (LSF)
    Abstract: We investigate the effect of the fund provider s brand on mutual fund flows by using a unique data set that represents a direct assessment of the brand image of European fund providers. A superior brand image increases the sensitivity of flows to past performance, while an inferior brand decreases it. Funds with a superior brand are not protected against outflows when there is underperformance. A superior brand, coupled with high past performance, generates persistent inflows and performance persistence so investors will benefit when a superior brand fund with high past performance is chosen.
    JEL: G11 G23
    Date: 2013
  6. By: Francesca Checchinato (Dept. of Management, Università Ca' Foscari Venice); Lala Hu (Dept. of Management, Università Ca' Foscari Venice); Alessandra Perri (Dept. of Management, Università Ca' Foscari Venice); Tiziano Vescovi (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: Chinese latecomer firms adopt internationalization strategies in order to gain the necessary resources and competences to compete in the local and global markets. In this process, different sectors are involved: not only in the electronic one (e.g. Haier and Huawei represent two successful cases), but also in other industries Chinese firms have achieved high competitiveness in the global scenario. In this paper, we analyze the case of Goodbaby, a Chinese baby strollersÕ manufacturer. This company has implemented its internationalization activities since the early 1990s, and it is now one of the main stroller manufacturers in the world and the leading brand in China. In order to analyze the brand awareness and purchase behavior in the local market, the empirical design used in this study encompasses the combination of the competitive analysis of strollersÕ brands in the Chinese market and a questionnaire to Chinese consumers. Our research shows that GoodbabyÕs history reflects the internationalization process of multinationals from emerging markets (EM-MNEs), while confirming GoodbabyÕs high competitiveness in a sector that was traditionally dominated by foreign brands. Some managerial implications will be discussed.
    Keywords: China, global, glocal, internationalization, Goodbaby
    JEL: M16 M30
    Date: 2013–11
  7. By: Jeffrey T. Prince (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Shane Greenstein (Department of Management and Strategy, Kellogg School of Management, Northwestern University)
    Abstract: The television industry is undergoing a generational shift in structure; however, many demand-side determinants are still not well understood. We model how consumers choose video content provision among: over-the-air (OTA), paid subscription to cable or satellite, and online streaming (also known as over-the-top, or OTT). We apply our model to a U.S. dataset encompassing both the digital switchover for OTA and the emergence of OTT, along with a recession, and use it to analyze cord-cutting behavior (i.e., dropping of cable/satellite subscriptions). We find high levels of cord cutting during this time, and evidence that it became relatively more prevalent among low-income and younger households – suggesting this group responded to changes in OTA and streaming options. We find little evidence of households weighing relative content offerings/quality when choosing their means of video provision during the timespan of our data. This last finding has important ramifications for strategic interaction between content providers.
    Keywords: Telecommunications, Cord-cutting, video, digital switchover, online streaming, content
    JEL: L96
    Date: 2013–10
  8. By: Pedro Bordalo; Nicola Gennaioli; Andrei Shleifer

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