nep-mkt New Economics Papers
on Marketing
Issue of 2015‒02‒28
four papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. A Welfare Assessment of Revenue Management Systems By Dupuis, Nicolas ; Ivaldi, Marc ; Pouyet, Jérôme
  2. Price Discrimination in Asymmetric Industries: Implications for Competition and Welfare By Hinnerk Gnutzmann
  3. Online complaint handling practices: Company strategies and their effects upon post-complaint satisfaction By Pierre-Nicolas Schwab
  4. Is Sniping A Problem For Online Auction Markets? By Matthew Backus ; Tom Blake ; Dimitriy V. Masterov ; Steven Tadelis

  1. By: Dupuis, Nicolas ; Ivaldi, Marc ; Pouyet, Jérôme
    Abstract: We study the welfare impact of revenue management, i.e. intertemporal price discrimination when the product availability is limited both in time and quantity, and consumers' arrival is random. This practice is particularly relevant, and widely spread, in the transport industry, but little is known about its implications on profits and consumer surplus. We develop a theoretical model of revenue management allowing for heterogeneity in product characteristics, capacity constraints, consumer preferences, and probabilities of arrival. We also introduce dynamic competition between revenue managers. We solve this model computationally and recover the optimal pricing strategies. We find that revenue management is welfare enhancing. Revenue managers face two types of constraints: a limited booking period and fixed capacities. Previous sales affect the relative slackness of these two constraints, explaining price variations. Profits increase as the practice offers more leeway to the seller compared to posting a fixed price throughout the booking period. Total consumer surplus also increases for a wide range of specifications, as revenue management raises the number of sales. In the presence of heterogeneous consumers, consumers with low price sensitivity subsidize ones with high price sensitivity when demand is low but both types benefit from the practice when demand is high. This sheds some light on the impact of revenue management on the surplus of business and leisure passengers.
    Keywords: dynamic computational models; intertemporal price discrimination; revenue management; transport fares
    JEL: C63 R41
    Date: 2015–02
  2. By: Hinnerk Gnutzmann (Università Cattolica del Sacro Cuore ; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore )
    Abstract: Price discrimination by consumer's purchase history is widely used in regulated industries, such as communication or utilities, both by incumbents and entrants. I show that such discrimination can have surprisingly negative welfare eects { even though prices and industry prots fall, so does consumer surplus. Earlier studies that did not allow entrants to discriminate or assumed symmetric rms yielded sharply dierent results, the pro{competitive eect of price discrimination are stronger in these settings. Imposing a pricing constraint on incumbent's discrimination leads the entrant to discriminate more heavily, but still improves both consumer and producer welfare.
    Keywords: History{based price discrimination, asymmetric price discrimination, switching cost
    JEL: L13 L41
    Date: 2014–11
  3. By: Pierre-Nicolas Schwab
    Abstract: The present study aimed to examine (1) the nature of firms’ complaint-handling practices in an online double-deviation context, and (2) the relationship between complaint-handling practices on the one hand and customer post-complaint satisfaction on the other. Predictions were derived from justice theory and existing research and practice concerning the attributes of effective organizational complaint-handling. 523 naturally occurring exchanges between complainants and 179 firms were coded and content analyzed. Descriptive analyses showed that best practices for complaint-handling were infrequent, and that poor complaint-handling practices occurred in comparable proportions to best practices. Findings from a multinomial regression analysis demonstrated that the practice most strongly associated with post-complaint satisfaction related to the provision of evidence that the complainant’s problem had been, or was about to be, solved. Moreover, of the four (marginally) significant relationships between pre-established attributes of perceived justice and customer satisfaction, three pertained to practices that destroy customer-seller relationships. The implications of the findings for research and practice are discussed.
    Keywords: complaint-handling; online; double-deviation; perceived justice
    JEL: M31
    Date: 2015–02–10
  4. By: Matthew Backus ; Tom Blake ; Dimitriy V. Masterov ; Steven Tadelis
    Abstract: A common complaint about online auctions for consumer goods is the presence of "snipers," who place bids in the final seconds of sequential ascending auctions with predetermined ending times. The literature conjectures that snipers are best-responding to the existence of "incremental" bidders that bid up to their valuation only as they are outbid. Snipers aim to catch these incremental bidders at a price below their reserve, with no time to respond. As a consequence, these incremental bidders may experience regret when they are outbid at the last moment at a price below their reservation value. We measure the effect of this experience on a new buyer's propensity to participate in future auctions. We show the effect to be causal using a carefully selected subset of auctions from and instrumental variables estimation strategy. Bidders respond to sniping quite strongly and are between 4 and 18 percent less likely to return to the platform.
    JEL: D12 D44 L81
    Date: 2015–02

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