nep-mkt New Economics Papers
on Marketing
Issue of 2014‒02‒02
eighteen papers chosen by
Joao Carlos Correia Leitao
Universidade da Beira Interior and Universidade de Lisboa

  1. Price Guarantees, Consumer Search, and Hassle Costs By Schwalbe, Ulrich; Baake, Pio
  2. Regulation of Pharmaceutical Prices: Evidence from a Reference Price Reform in Denmark By Kaiser, Ulrich; Méndez, Susan; Rønde, Thomas; Ullrich, Hannes
  3. Either or Both Competition: A "Two-Sided" Theory of Advertising with Overlapping Viewerships By Reisinger, Markus; Ambrus, Attila; Calvano, Emilio
  4. Advertising, Reputation, and Environmental Stewardship: Evidence from the BP Oil Spill By Lint Barrage; Eric Chyn; Justine Hastings
  5. Image concerns and the provision of quality By Friedrichsen, Jana
  6. Intermediated vs. Direct Sales and a No-Discrimination Rule By Wismer, Sebastian
  7. Inter-Format Competition - The Role of Private Label Products in Market Delineation By Rickert, Dennis; Wey, Christian; Haucap, Justus; Heimeshoff, Ulrich; Klein, Gordon J.
  8. Colombian coffee strategies and the livelihoods of smallholders By Niño Peña, Monica Patricia; Pelupessy, Wim
  9. Les achats de prestations marketing et de communication : les achats de prestations liées au digital By Angélique Laffargue
  10. Who Should be in Power to Encourage Product Program Innovativeness, R&D or Marketing? By Stock, Ruth; Reiferscheid, Ines
  11. Connected Televisions: Convergence and Emerging Business Models By OECD
  12. Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption By Eric Darmon; Alexandra Rufini; Dominique Torre
  13. Welfare Effects of Public Service Broadcasting in a Free-to-Air TV Market By Sieg, Gernot; Rothbauer, Jula
  14. Market Share Dynamics in a Duopoly Model with Word-of-Mouth Communication By Kovac, Eugen; Eugen, Kovac; Robert, Schmidt
  15. The proposal of two local marketing approaches inspired by the different practices of Wall Street Institute France Isère and Wall Street Institute China Shenzhen By Simin Wu
  16. The App Economy By OECD
  17. Piracy and Movie Revenues: Evidence from Megaupload By Peukert, Christian; Claussen, Jörg; Kretschmer, Tobias
  18. Price Discrimination in Input Markets: Quantity Discounts and Private Information By Müller, Daniel; Herweg, Fabian

  1. By: Schwalbe, Ulrich; Baake, Pio
    Abstract: The paper deals with the competitive effects of price guarantees in a spatial duopoly where consumers can search for lower prices but have to incur hassle costs if they want to claim a price guarantee. It is shown that symmetric equilibria with and without price guarantees exist but price guarantees will have no effect on prices if search costs are low, hassle costs are high and the number of uninformed consumers is small. However, when both firms use price guarantees, there also exist payoff-dominant equilibria where both firms use mixed pricing strategies in the form of "high-low" pricing schemes, provided that the search costs are sufficiently high. --
    JEL: D43 L13 C72
    Date: 2013
  2. By: Kaiser, Ulrich; Méndez, Susan; Rønde, Thomas; Ullrich, Hannes
    Abstract: Reference prices constitute a main determinant of patient health care reimbursement in many countries. We study the effects of a change from an "external" (based on a basket of prices in other countries) to an "internal" (based on comparable domestic products) reference price system. We find that while our estimated consumer compensating variation is small, the reform led to substantial reductions in list and reference prices as well as co-payments, and to sizeable decreases in overall producer revenues, health care expenditures, and co-payments. These effects differ markedly between branded drugs, generics, and parallel imports with health care expenditures and producer revenues decreasing and co-payments increasing most for branded drugs. The reform also induced consumers to substitute from branded drugs - for which they have strong preferences - to generics and parallel imports. This substitution also explains the small increase in consumer welfare despite a substantial decrease in expenditures. --
    JEL: I18 C23 D22
    Date: 2013
  3. By: Reisinger, Markus; Ambrus, Attila; Calvano, Emilio
    Abstract: This paper develops a fairly general model of platform competition in media markets allowing viewers to use multiple platforms. This leads to a new form of competition between platforms, in which they do not steal viewers from each other, but affect the viewer composition and thereby the resulting value of a viewer for the other platform. We label this form of competition "either or both." A central result is that platform ownership does not affect advertising levels, despite nontrivial strategic interaction between platforms. This result holds for general viewer demand functions and is robust to allowing for viewer fees. We show that the equilibrium advertising level is inefficiently high. We also demonstrate that entry of a platform leads to an increase in the advertising level if viewers' preferences for the platforms are negatively correlated, which contrasts with predictions of standard models with either/or competition. We validate this result in an empirical analysis using panel data for the U.S. cable television industry. --
    JEL: L13 M37 L82
    Date: 2013
  4. By: Lint Barrage; Eric Chyn; Justine Hastings
    Abstract: This paper explores whether and how environmental stewardship can be provided by private markets through green advertising. We examine the period surrounding the BP oil spill and estimate how BP’s pre-spill investment in “green advertising” affected the spill’s impact on retail prices and demand at BP gasoline stations. We use station-level prices and sales from a large sample of U.S. retail gasoline stations, and market-level advertising expenditures during BP’s 2000-2008 “Beyond Petroleum” advertising campaign. We find evidence consistent with consumer punishment of BP in the months following the spill; overall BP margins declined significantly by 4.2 cents per gallon, and volumes declined by 3.6 percent during the spill. We examine how pre-spill environmental advertising affected the spill’s impact on margins and sales, testing whether expenditures on green reputation act as a commitment to green production or as insurance against environmental damage. We find evidence in support of the latter: pre-spill exposure to BP advertising significantly softened the impact of the spill on BP retail margins, and abated losses to station share from stations switching to alternative gasoline brands.
    JEL: H0 H23 L0 M3 M38 Q5
    Date: 2014–01
  5. By: Friedrichsen, Jana
    Abstract: In this paper, I study markets where consumers are heterogeneous with respect to both their concerns for the quality of goods and the image associated with them. Consumers with a taste for quality lend a positive image to the product of their choice and thereby increase the product's value to others. A monopolist restricts the product portfolio and charges price premia to allocate image along with quality. Heterogeneity in image concerns thereby provides a rationale for pooling consumers with differing quality preferences. Although image is correlated with a product's quality in equilibrium, an increase in the value of image may decrease quality provision. In a competitive market, premium prices are unsustainable so that image-concerned consumers buy excessive quality instead. Monopoly may therefore yield higher welfare than competition. Policy options to remedy the efficiency losses are discussed. --
    Keywords: image motivation,conspicuous consumption,two-dimensional screening,ethical consumption
    JEL: D21 D82 L15
    Date: 2013
  6. By: Wismer, Sebastian
    Abstract: When sellers join a platform to sell their products, the platform operator may restrict their strategic decisions. In fact, several platform operators impose most-favored treatment or no-discrimination rules (NDRs), asking sellers not to offer better sales conditions elsewhere. In this paper, I analyze a model that allows for an endogenous split-up of consumers between sales channels. Competing sellers might set different prices across channels, depending on the platform tariff and presence of a NDR. I find that the platform operator imposes a NDR if he faces high transaction costs, if seller competition is weak, and if the initial distribution of consumers on channels is strongly skewed. Prohibiting NDRs can have both positive and negative effects on welfare. --
    JEL: L81 L42 D40
    Date: 2013
  7. By: Rickert, Dennis; Wey, Christian; Haucap, Justus; Heimeshoff, Ulrich; Klein, Gordon J.
    Abstract: Given various recent antitrust investigations on the retail sector, we deal with uncovering demand systems substitution patterns for a particular market (diapers) to investigate the inter-format competition (supermarkets vs. discounters vs. drugstores). Using the uncovered demand system we compute retail and manufacturer margins and combine those with standard market delineation techniques, showing that the strongest substitution patterns are between the leading brand as well as private labels sold at drugstores and discounters. This result is important given controversies among competition authorities, firms and academic researchers. --
    JEL: L40 L81 C50
    Date: 2013
  8. By: Niño Peña, Monica Patricia; Pelupessy, Wim
    Abstract: The purpose of this paper is to assess the effects that different competitiveness strategies based on commercial quality attributes may have on the livelihoods of small coffee growers in Colombia. Using a combination of global value chain and sustainable livelihood approaches, it appears that the impacts of traditionally applied material quality, symbolic and in-person services characteristics are quite different for the growers. The possibility of smallholders to benefit from quality attributes is greatly influenced by the global chain governance structure imposed by big multinational roasters in developed countries and the National Federation of Coffee Growers who acts as domestic lead firm and official external regulator in Colombia. The unequal power distribution in the chain has effects on growers’ income as they grasp direct benefits from the first transformations of coffee, but are far from the end product that consumers buy. Most of the value added during the coffee trans¬formation process accrues to the consuming country where branding, marketing and advertising are high-value generating activities. From the micro-level perspec¬tive it appears that endowments of key assets are not enough for growers to reach the poverty line through coffee production exclusively, while the socio-cultural assets of coffee growing are also threatened by disintegrating pressures from the nearby capital Bogotá. Further material and symbolic quality improvements may benefit the growers but are usually not enough to raise household income above the poverty line. A regional denomination of origin strategy may improve the local economic and cultural sustainability of coffee growing.
    Keywords: Colombia; coffee; livelihoods
    Date: 2014–01
  9. By: Angélique Laffargue (IAE Grenoble - Institut d'Administration des Entreprises - Grenoble - Université Pierre-Mendès-France - Grenoble II)
    Abstract: À travers ce mémoire, nous visons à faire un état des lieux et analyser les achats de marketing services, afin de pouvoir mieux orienter l'analyse terrain qui sera réalisée chez L'Oréal par la suite. En effet, cette fonction achat demeure généralement peu ou mal connue aussi bien de manière interne et de manière externe à l'entreprise. Cela est d'ailleurs visible par le peu de littérature qu'il existe à ce sujet. Le premier objectif de ce mémoire est ainsi de mieux comprendre cette famille d'achat en faisant ressortir ce qu'elle recouvre, ses particularités et son niveau de maturité. Le second objectif est d'expliquer toute la démarche qui a été faite au cours de ces derniers mois sur une catégorie achat de marketing services de plus en plus importante stratégiquement et en termes de spend chez L'Oréal : le digital. Nous partirons ainsi d'une étude de marketing achat afin de faire un état des lieux interne et externe sur cette famille d'achat encore peu couverte par les services achats. Puis, à la suite de cette étude, nous apporterons des préconisations pour d'éventuelles actions pouvant être menées par les achats sur cette famille.
    Keywords: prestataire externe, marketing, communication,
    Date: 2013
  10. By: Stock, Ruth; Reiferscheid, Ines
    Date: 2013
  11. By: OECD
    Abstract: Connected televisions are defined for the purposes of this report as devices that have the capability to interact with the Internet to display audio-visual content. Connected television is an important development because it permits the provision of certain new and valuable services to end-users. These services will also have implications for the activities of all of the players in the content distribution ecosystem. In addition to identifying the new services that connected television enables, the report analyses in some detail their effects on networks (i.e. the physical communication links that carry content to end-users). The impact on content producers themselves, on content distributors (such as traditional pay television companies), on hardware vendors, and on providers of support services such as advertising and programme guides is considered much more briefly. More detailed examination of these matters could be the subject of future work. The report also includes a discussion of policy implications raised by connected televisions for the actual connected television devices and for network infrastructure.
    Date: 2014–01–22
  12. By: Eric Darmon (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Alexandra Rufini (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS]); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good) and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher's strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.
    Keywords: software distribution strategy ; piracy ; experience good ; misleading announcements
    Date: 2014–01–16
  13. By: Sieg, Gernot; Rothbauer, Jula
    Abstract: A welfare-maximizing Public Service Broadcaster (PSB) broadcasts both information-type and show-type content if (i) the information consumption of TV viewers generates external benefits for society by improving the ability of voters to control politicians and (ii) the marginal external benefits of information consumption diminish as the information possessed by voters increases. We analyze a two-sided free-to-air TV market with two differentiated private channels and a commercial-free PSB. Welfare depends on the efficiency of the PSB, the external benefits of voter information, and lost rents from the advertising market. Welfare can be higher without a PSB. --
    JEL: L82 D72 L32
    Date: 2013
  14. By: Kovac, Eugen; Eugen, Kovac; Robert, Schmidt
    Abstract: We analyze dynamic price competition in a homogeneous goods duopoly, where consumers exchange information via word-of-mouth communication. A fraction of consumers, who do not learn any new information, remain locked-in at their previous supplier in each period. We analyze Markov perfect equilibria in which firms use mixed pricing strategies. Market share dynamics are driven by the endogenous price dispersion. Depending on the parameters, we obtain different 'classes' of dynamics. When firms are impatient, there is a tendency towards equal market shares. When firms are patient, there are extended intervals of market dominance, interrupted by sudden changes in the leadership position. --
    JEL: C73 D83 L11
    Date: 2013
  15. By: Simin Wu (IAE Grenoble - Institut d'Administration des Entreprises - Grenoble - Université Pierre-Mendès-France - Grenoble II)
    Abstract: This dissertation is for the purpose of comparing two different practices of the same business content from one international franchisor - Wall Street Institute International. The dissertation evaluates the different practices of Wall Street Institute France Isère and Wall Street Institute China Shenzhen, in terms of four aspects which are: infrastructure, service, sales and others. An analysis of these differences is given in the dissertation followed by two local marketing proposals for Wall Street Institute France Isère that are inspired by the two practices.
    Keywords: English training industry, franchising, marketing, formation d'anglais, franchiser, commercial
    Date: 2013
  16. By: OECD
    Abstract: Mobile applications, also known as “apps”, are a highly innovative and are an expanding sector of the economy, so policy makers are keen to maximise their innovative potential. Mobile platform markets are fiercely competitive, as highlighted by the recent rise and decline of platforms such as Blackberry, and governments are rightfully allowing market mechanisms to play out with minimal government intervention. However, as the app economy matures, there are increasing calls for transparency on how data is collected and used by apps. Leading mobile platform providers have recently taken steps to improve transparency on how apps access personal data but more can be done to inform users and give them the ability to limit access. This paper provides an overview of the app economy and identifies emerging policy issues related to competition, consumer protection and skills development.
    Date: 2013–12–16
  17. By: Peukert, Christian; Claussen, Jörg; Kretschmer, Tobias
    Abstract: In this paper we make use of a quasi-experiment in the market for illegal downloading to study movie box office revenues. Exogenous variation comes from the unexpected shutdown of the popular file hosting platform on January 19, 2012. The estimation strategy is based on a quasi difference-in-differences approach. We compare box office revenues before and after the shutdown to a matched control group of movies unaffected by the shutdown. We find that the shutdown had a negative, yet insignificant effect on box office revenues.This counterintuitive result may suggest support for the theoretical perspective of (social) network effects where file-sharing acts as a mechanism to spread information about a good from consumers with zero or low willingness to pay to users with high willingness to pay. --
    JEL: L50 L82 D83
    Date: 2013
  18. By: Müller, Daniel; Herweg, Fabian
    Abstract: We consider a monopolistic supplier's optimal choice of wholesale tariffs when downstream firms are privately informed about their retail costs. Under discriminatory pricing, downstream firms that differ in their ex ante distribution of retail costs are offered different tariffs. Under uniform pricing, the same wholesale tariff is offered to all downstream firms. In contrast to the extant literature on price discrimination with nonlinear wholesale tariffs, we find that banning discriminatory wholesale contracts often improves welfare. This also holds if the manufacturer is not an unconstrained monopolist. Moreover, uniform pricing increases downstream investments in cost reduction in the long run. --
    JEL: D43 L11 L42
    Date: 2013

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