nep-mkt New Economics Papers
on Marketing
Issue of 2015‒02‒16
nine papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Image Concerns and the Provision of Quality By Friedrichsen, Jana
  2. Video Killed the Radio Star? Online Music Videos and Digital Music Sales By Peukert, Christian; Kretschmer, Tobias
  3. Are Consumers Concerned about Palm Oil? Evidence from a Lab Experiment By Anne-Célia Disdier; Stéphan Marette; Guy Millet
  4. Cournot Oligopoly, Homogeneous Products and Grappa Market: An Econometric Study By Laura Onofri; Vasco Boatto
  5. A Friendly Turn: Advertising Bias in the News Media By Ruenzi, Stefan; Focke, Florens; Niessen-Ruenzi, Alexandra
  6. Are commercial ceilings appropriate for the regulation of commercial overload on free-to-air TV channels? By Rothbauer, Julia; Sieg, Gernot
  7. Consumer demand for the mobile Internet in a greenfield emerging market: The case of Myanmar By Thaw Tar Min; Fife, Elizabeth; Bohlin, Erik
  8. Reference pricing and cost-sharing: Theory and evidence on German off-patent drugs By Herr, Annika; Stühmeier, Torben; Wenzel, Tobias
  9. A Factor Analytical Approach to Price Discovery By Westerlund, Joakim; Reese, Simon; Narayan, Paresh

  1. By: Friedrichsen, Jana
    Abstract: Consumption patterns can be indicative of how a consumer wants to be perceived by others. 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 buying 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. By restricting the product space, monopoly allows for more efficient allocation of image and may therefore yield higher welfare than competition. Policy options to remedy the efficiency losses are discussed.
    JEL: D21 D82 L15
    Date: 2014
  2. By: Peukert, Christian; Kretschmer, Tobias
    Abstract: Sampling poses an interesting problem in markets with experience goods. On the one hand, free samples reveal product quality and help consumers to make informed purchase decisions (promotional eff ect). On the other hand, sampling may induce consumers to substitute purchases with free consumption (displacement eff ect). We look at this trade-off in the market for digital music where consumers can sample the horizontal quality of songs by watching free music videos online. Identifi cation comes from a natural experiment in Germany, where virtually all videos that contain music are blocked on a popular video platform due to a legal dispute with representatives of the rights-holders. We show that promotional and displacement eff ects cancel out in the sales performance of songs, whereas online music videos trigger sales of albums.
    JEL: L82 M37 D83
    Date: 2014
  3. By: Anne-Célia Disdier; Stéphan Marette; Guy Millet
    Abstract: A lab experiment evaluates the consequences of the palm oil controversy on consumers’ willingness to pay (WTP) for food products. Palm oil production induces environmental damages, and its consumption presents a health risk. However, the production of alternative oils raises land use issues. In the experiment, successive messages emphasizing the controversial nature of palm oil and palm oil-free products are delivered to participants. Information has a significant influence on WTP when it underlines the negative impact of the related product. This effect is stronger for the palm oil product than for the palm oil-free product. The experiment also compares the welfare effects of two regulatory instruments, namely a consumer information campaign versus a per-unit tax. Because of the controversial nature of both products, the information campaign improves welfare with a much larger impact than the tax.
    JEL: H23
  4. By: Laura Onofri; Vasco Boatto
    Abstract: In this study, using scanner data, collected from super-market transactions in 2009, we estimate an eight equations simultaneous model with a 3SLS routine, with the objective to empirically analyze the Grappa market structure. Results show that the supply side of the Grappa market is characterized by an oligopolistic structure, where the dominant firms compete as oligopolists à la Cournot with homogeneous products. Firms’ competition is mostly played on the quantity grounds and mostly disregards product differentiation strategies. The dominant firms produce and supply a “cheap”, homogenous product. Interpretation of the results focus on cultural consumption of this very “ancient” liquor and corroborate previous studies, where hedonic analysis of the demand side has shown consumers’ very low/null implicit prices for the product differentiated characteristics.
    Keywords: Cournot oligopoly, 3SLS, scanner data, grappa market.
    JEL: L13 Q11 C3
    Date: 2015–01–01
  5. By: Ruenzi, Stefan; Focke, Florens; Niessen-Ruenzi, Alexandra
    Abstract: This paper investigates whether newspapers report more favorably about advertising corporate clients than about other firms. Our identification strategy based on high-dimensional fixed effects and high frequency advertising data shows that advertising leads to more positive press coverage. This advertising bias in reporting is found among local and national newspapers. Further results show that advertising bias manifests particularly in less negative reporting after bad news events such as negative earnings surprises or extremely negative stock returns. Our findings cast doubt on the independence of the press from corporate pressure and hint at important information frictions.
    JEL: M37 M38 G10
    Date: 2014
  6. By: Rothbauer, Julia; Sieg, Gernot
    Abstract: Commercial ceilings not only restrict broadcasters in their decisions about commercial broadcasting time, but also affect their differentiation of program content. This study examines the welfare effects of commercial ceilings in a two-sided free-to-air TV market, taking into account welfare with respect to content differentiation. We identify a second-best commercial ceiling that maximizes welfare in the absence of enforceable program content regulation and identify the situations in which laissez faire is optimal. The deregulation of commercial broadcasting can improve welfare, even if the laissez-faire level of commercial broadcasting time is excessive.
    JEL: L82 M38 D61
    Date: 2014
  7. By: Thaw Tar Min; Fife, Elizabeth; Bohlin, Erik
    Abstract: This paper offers a baseline for understanding the mobile Internet market in Myanmar before widespread adoption occurs. The purpose of the paper is to explore consumers' initial demand for existing and future mobile services; the behaviour of mobile users and mobile Internet usage in such a greenfield market where mobile phone services are still emerging. The results of this study are aimed to gain insight into the current dynamics that may become more important when mobile networks and services are in place in near future. The results show that communications is the primary motive for both mobile phone users and non-users. Unexpectedly, gaining help in an urgent situation is the most vital motivation for mobile owners in Myanmar. It is surprising to see that social networking services were highly ranked compared to other mobile services available today. Respondents predict that the future services they will be most willing to use include access to community information and healthcare services. Interestingly, the mobile Internet is the most frequently used Internet services in Myanmar. In addition, demographic factors have a significant effect on mobile Internet usage. Lastly, the study contributes some thoughts for future research.
    Keywords: mobile services,consumer demand,Myanmar
    Date: 2014
  8. By: Herr, Annika; Stühmeier, Torben; Wenzel, Tobias
    Abstract: This paper evaluates the impact of reference pricing on prices and co-payments in the (German) market for off-patent pharmaceuticals. We present a theoretical model with price-sensitive and loyal consumers that shows that a decrease in the reference price affects the consumers' co-payments in a non-monotonic way: For high reference prices, a marginally lower reference price may lead to lower co-payments. However, for low reference prices a further reduction may result into higher consumer co-payments. We use quarterly data on reference priced drugs covered by the social health insurance in Germany over the period 2007 - 2010 to analyze the empirical effects of reference price reductions. We find that, while prices decrease due to the reduction, co-payments behave non-monotonically and indeed increase if the reference price is sufficiently low.
    JEL: I18 I11 L13
    Date: 2014
  9. By: Westerlund, Joakim (Department of Economics, Lund University); Reese, Simon (Department of Economics, Lund University); Narayan, Paresh (Centre for Research in Economics and Financial Econometrics, Deakin University)
    Abstract: Existing econometric approaches for studying price discovery presume that the number of markets are small, and their properties become suspect when this restriction is not met. They also require making identifying restrictions and are in many cases not suitable for statistical inference. The current paper takes these shortcomings as a starting point to develop a factor analytical approach that makes use of the cross-sectional variation of the data, yet is very user-friendly in that it does not involve any identifying restrictions or obstacles to inference.
    Keywords: Price discovery; panel data; common factor models; cross-unit cointegration
    JEL: C12 C13 C33
    Date: 2014–12–30

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