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on Marketing |
| By: | Raphael Boleslavsky (University of Miami); Christopher Cotton (Queen's University); Haresh Gurnani (Wake Forest University) |
| Abstract: | We incorporate product demonstrations into a game theoretic model of firm price competition. Demonstrations may include product samples, trials, return policies, reviews, or any other means by which a firm allows consumers to learn about their value for a new product. In our model, demonstrations help individual consumers learn whether they prefer an innovation over an established product. The innovative firm controls demonstration informativeness. When prices can respond to demonstration policies, the firm prefers to provide maximumly informative demonstrations, which optimally segment the market, dampen subsequent price competition, and maximize profits. In contrast, when prices are less flexible, the firm prefers only partially informative demonstrations, designed to maximize its market share at prevailing prices. Such a strategy can generate the monopoly profit for the innovative firm. We contrast the strategic role of demonstrations in our framework with the strategic role of capacity limits in models of judo economics (e.g. Gelman and Salop 1983), which also allow firms to divide a market and reduce competition. |
| Keywords: | judo economics, demonstrations, product trials, product samples, return policies, money back guarantees, marketing strategy, product differentiation |
| JEL: | L13 L15 D83 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1347&r=mkt |
| By: | Leibtag, Ephraim |
| Keywords: | Agribusiness, Agricultural and Food Policy, Food Security and Poverty, Marketing, |
| Date: | 2015–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao15:204993&r=mkt |
| By: | Montes, Rodrigo; Sand-Zantman, Wilfried; Valletti, Tommaso |
| Abstract: | This paper investigates the effects of price discrimination on prices, profits and consumer surplus, when one or more competing firms can use consumers' private information to price discriminate and consumers can pay a privacy cost to avoid it. While a monopolist always benefits from higher privacy costs, this is not true in the competing duopoly case. In this last case, firms' individual profits are decreasing while consumer surplus is increasing in the privacy cost. Finally, under competition, we show that the optimal selling strategy for the owner of consumer data consists in dealing exclusively with one firm in order to create maximal competition between the winner and the loser of data. This brings ineficiencies, and we show that policy makers should concentrate their attention on exclusivity deals rather than making it easier for consumers to protect their privacy. |
| Keywords: | Privacy, Information, Price Discrimination |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:29367&r=mkt |
| By: | Rodrigo Montes (Toulouse School of Economics); Wilfried Sand-Zantman (Toulouse School of Economics and ESSEC Business School); Tommaso Valletti (Imperial College London, DEF and CEIS, Università di Roma "Tor Vergata" & CEPR) |
| Abstract: | This paper investigates the effects of price discrimination on prices, profits and consumer surplus, when one or more competing firms can use consumers' private information to price discriminate and consumers can pay a privacy cost to avoid it. While a monopolist always benefits from higher privacy costs, this is not true in the competing duopoly case. In this last case, firms' individual profits are decreasing while consumer surplus is increasing in the privacy cost. Finally, under competition, we show that the optimal selling strategy for the owner of consumer data consists in dealing exclusively with one firm in order to create maximal competition between the winner and the loser of data. This brings inefficiencies, and we show that policy makers should concentrate their attention on exclusivity deals rather than making it easier for consumers to protect their privacy. |
| Date: | 2015–08–05 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:352&r=mkt |
| By: | Rachel Griffith (Institute for Fiscal Studies and IFS and Manchester); Martin O'Connell (Institute for Fiscal Studies); Kate Smith (Institute for Fiscal Studies) |
| Abstract: | Improving diet quality has been a major target of public health policy. Governments have encouraged consumers to make healthier food choices and firms to reformulate food products. Evaluation of such policies has focused on the impact on consumer behaviour; firm behaviour has been less well studied. We study the recent decline in dietary salt intake in the UK, and show that it was entirely attributable to product reformulation by firms; a contemporaneous information campaign had little impact, consumer switching between products in fact worked in the opposite direction and led to a slight increase in the salt intensity of groceries purchased. These findings point to the important role that firms can play in achieving public policy goals. |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:14/15&r=mkt |
| By: | Ayoub, Hassan; kertous, Mourad |
| Abstract: | This study on willingness to pay of Lebanese households to improve service quality drinking water is part of an economic environment that favors the beneficiaries' contribution to the management of social infrastructure. Its objective is to determine the level of input from consumers who would have a better service for drinking water. Through a socio-economic status, this study produces information that provide guidance on public opinion about the paid access to community facilities and the conditions under which consumers are willing to pay. Econometric analysis has identified the significant variables that influence the willingness to pay for improved food service. Consistent with the theory of demand, the income variable influence positively willingness to pay as opposed to the variable amount of water consumed. Based on theses willingness to pay, the study focuses on finding an appropriate pricing policy that would be a price level of consensus reconciling the purchasing power of consumers with the rate of return of establishments’ water. |
| Keywords: | Willingness to pay, service quality, drinking water, Lebanon. |
| JEL: | Q53 Q56 Q58 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65986&r=mkt |
| By: | Wells, Alex |
| Keywords: | Agribusiness, Agricultural and Food Policy, International Development, Marketing, |
| Date: | 2015–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao15:204983&r=mkt |
| By: | Durando, Michael |
| Keywords: | Marketing, Political Economy, Production Economics, |
| Date: | 2015–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usao15:205039&r=mkt |
| By: | Minten, Bart; Dereje, Mekdim; Engeda, Ermias; Tamru, Seneshaw |
| Abstract: | Voluntary Sustainability Standards (VSS) are rapidly increasing in global value chains. While consumers, mostly in developed countries, are willing to pay significant premiums for such standards, it is not well understood how effectively these incentives are transmitted to producing countries. We study VSS in Ethiopia’s coffee sector, the country’s most important export commodity, using a unique census of transaction data at the export level and large-scale data at the production level. We find that transmission of the export quality premiums to coffee pro-ducers is limited, with only one-third of this premium being passed on. Moreover, as quality premiums are small and average production levels in these settings are low, these premiums would only lead to an increased income for coffee farmers of 20 USD per year even with a perfect transmission scenario, and therefore would have little effect on the welfare of the average coffee farmer. |
| Keywords: | Sustainability, coffee, exports, Commodities, Quality, value chains, high value agricultural products, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:esspwp:71&r=mkt |