nep-mkt New Economics Papers
on Marketing
Issue of 2016‒04‒04
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Attention and Saliency on the Internet: Evidence from an Online Recommendation System By Christian Helmers; Pramila Krishnan; Manasa Patnam;
  2. The role of short food supply chains in the development of small-scale local producers case study: Harghita County By Tanasa, Lucian; Bruma, Ioan Sebastian; Dobos, Sebastian
  3. Competitive Price Targeting with Smartphone Coupons By Jean-Pierre H. Dubé; Zheng Fang; Nathan Fong; Xueming Luo
  4. Distribution Planning and Pricing in View of Increasing Shares of Intermittent, Renewable Energy in Germany and Japan By Christine Brandstätt; Gert Brunekreeft; Ken Furusawa; Toru Hattori
  5. The Localization of Interfirm Transaction Relationships and Industry Agglomeration By Nakajima, Kentaro; Saito, Yukiko Umeno; Uesugi, Iichiro
  6. Equilibrium with Consumer Adjustment to Choice By Matthew G. Nagler
  7. A Survey of the Empirical Evidence on PWYW Pricing By Matthias Greiff; Henrik Egbert
  8. Financial Consumer Protection And Literacy: A Compative Study Between Bulgaria And Romania By Filipova-Rivers, Magdalena
  9. Measuring the Stringency of Land-Use Regulation: The Case of China's Building-Height Limits By Brueckner, Jan; Fu, Shihe; Gu, Yizhen; Zhang, Junfu
  10. Vertical Differentiation and Collusion: Cannibalization or Proliferation? By Jean J. Gabszewicz; Marco A. Marini; Ornella Tarola
  11. The Determinants Of The TV Demand Of Soccer: Empirical Evidence On Italian Serie A For The Period 2008-2015 By Caruso, Raul; Addesa, Francesco; Di Domizio, Marco
  12. The Adoption and Termination of Profit Sharing for Employees: Does Management's Attitude Play a Role? By Uwe Jirjahn
  13. Corporate responsibility and national institutions: A quantitative assessment By Halkos, George; Skouloudis, Antonios
  14. How Does Innovation Differ across Business Functions? Employee-level Analysis of a Multinational Company By Fulvio Castellacci; Magnus Gulbrandsen; Jarle Hildrum; E. Martinkenaite; Erlend Simensen; Vegard Tveito
  15. Potasse : une guerre des prix bien commune By Yves Jégourel
  16. Monopoly VS Competition: Market Structure’s Impact on Product Innovation-with Endogenous Quality of New Product By Yang, Jinrui

  1. By: Christian Helmers; Pramila Krishnan; Manasa Patnam;
    Abstract: Using high-frequency transaction-level data from an online retail store, we examine whether consumer choices on the internet are consistent with models of limited attention. We test whether consumers are more likely to buy products that receive a saliency shock when they are recommended by new products. To identify the saliency effect, we rely on i) the timing of new product arrivals, ii) the fact that new products are per se highly salient upon arrival, drawing more attention and iii) regional variation in the composition of recommendation sets. We find a sharp and robust 6% increase in theaggregate sales of existing products after they are recommended by a new product. To structurally disentangle the effect of saliency on a consumer’s consideration and choice decision, we use data on individual transactions to estimate a probabilistic choice set model. We find that the saliency effectis driven largely by an expansion of consumers’ consideration sets.
    Keywords: Limited attention, advertising, online markets.
    JEL: D22 M30 K11 O34
    Date: 2015–11–10
  2. By: Tanasa, Lucian; Bruma, Ioan Sebastian; Dobos, Sebastian
    Abstract: Currently, short food supply chains represent a viable alternative to the conventional globalized supply chains, thus gradually becoming a more and more proeminent actor in the global logistics sector. The previously mentioned short food supply chains are in general extremely varied both in terms of nature and practices, benefiting producers as well as consumers from the socio-economic, environmental and health improvement points of view. In most cases, short food supply chains effectively reconnect end consumers, especially the young generations, with local small agri-food producers, thus contributing to the process of educating and/or sometimes reeducating individuals about the importance of adopting a healthy diet. Romania holds, in this respect, a high potential for the development of short food supply chains due to a series of factors such as: the large number of small semi-subsistence agricultural holdings (under 5 hectares); the persistent historical rural-urban link, as evidenced by the methods of obtaining food and groceries; the growing number of local certified producers, and last but not least the great veriety of specialized shops. Moreover, short supply chains stand solid chances of development in the near future as a result of sizeable financial support provided by the 2014-2020 National Rural Development Programme, which includes special promotion and development measures for small farmers and the short food supply sector. The present case study, which is based on field research undertaken across the Harghita county, aims to provide evidence of the existence and viability of short food supply chains in the agri food sector. The study identifies new associative forms between local producers and traditional processors and suppliers (butcher`s, meat processors, bakers etc.), specialized shops (groceries, mobile food carts, milk vending machines, on-line shops etc.), as well as new methods of promoting local traditional cuisine (gastronomic routes, food markets, food festivals).
    Keywords: short food supply chains, local food producers, new associative forms
    JEL: O52 Q13 Q18 R58
    Date: 2015–11–20
  3. By: Jean-Pierre H. Dubé; Zheng Fang; Nathan Fong; Xueming Luo
    Abstract: We conduct a large-scale field experiment to study competitive price discrimination in a duopoly market with two rival movie theaters. The firms use mobile targeting to offer different prices based on location and past consumer activity. A novel feature of our experiment is that we test a range of relative ticket prices from both firms to trace out their respective best-response functions and to assess equilibrium outcomes. We use our experimentally-generated data to estimate a demand model that can be used to predict the consumer choices and corresponding firm best-responses at price levels not included in the test. We find an empirically large return on investment when a single firm unilaterally targets its prices based on the geographic location or historical visit behavior of a mobile customer. However, these returns can be mitigated by competitive interactions whereby both firms simultaneously engage in targeting. In practice, firms typically test only their own prices and do not consider the competitive response of a rival. In our study of movie theaters, competition enhances the returns to behavioral targeting but reduces the returns to geo-targeting. Under geographic targeting, each theater offers a discount in the other rival's local market, toughening price competition. In contrast, under behavioral targeting, the strategic complementarity of prices coupled with the symmetric incentives of the two theaters to raise prices charged to high-recency customers softens price competition. Thus, managers need to consider how competition moderates the profitability of price targeting. Moreover, field experiments that hold the competitor's actions fixed may generate misleading conclusions if the permanent implementation of a tested action would likely elicit a competitive response.
    JEL: L1 L11 L13 M31
    Date: 2016–03
  4. By: Christine Brandstätt; Gert Brunekreeft; Ken Furusawa; Toru Hattori
    Abstract: In response to the global climate challenge many countries are faced with increasing shares of energy from renewable sources in their power supply. The integration of RES (renewable energy sources) generation however entails technical as well as institutional challenges for power grids. This study relies on recent experiences of German distribution network operators in network planning and network pricing and looks at their transferability to Japan. Distributed generation may cause problems of voltage variation and asset overloading in conventional power grids. Technical solutions for these problems are available and well-known yet require considerable investments. The study presents regulatory incentives for network operators to take efficient means to maintain supply quality. With distributed generation self-supplying customers may contribute too little to network cost and new generators and flexible consumers may cause significant investment by uncoordinated siting and operation. An adequate pricing scheme can serve to sustainably finance the infrastructure while at the same time giving incentives to coordinate network users. This study points out options for network charging in grids with high shares of distributed generation from renewable sources.
    Keywords: Electric Utilities, Regulation, Market Structure
    JEL: L1 L43 L51 L94
    Date: 2015–03
  5. By: Nakajima, Kentaro; Saito, Yukiko Umeno; Uesugi, Iichiro
    Abstract: Using a unique and massive dataset on firms' suppliers and customers, we examine the localization of transaction relationships to find the following. First, based on a counterfactual that controls for the location of firms and their potential partners, transaction relationships in about 90 to 95% of the three-digit manufacturing industries are localized within 40km. Second, based on a counterfactual that controls for the average distance of transaction relationships in the entire manufacturing sector, in about 40% of industries transaction relationships are localized. Third, the extent of industry agglomeration and the extent of the localization of transaction relationships are positively correlated.
    Keywords: Interfirm transactions, agglomeration, transaction distance
    JEL: R11
    Date: 2016–03
  6. By: Matthew G. Nagler (Ph.D. Program in Economics, Graduate Center, and Department of Economics and Business, City College of New York)
    Abstract: I present a spatial model of differentiated product markets in which consumers with heterogeneous tastes rationally improve their attitude towards the product they choose. Adjustment raises prices if adjustment facility is greater for consumers who initially prefer a product more (e.g., preferences and corresponding adjustments exhibit the halo effect). It lowers prices if instead easier adjustment for consumers with weaker initial preferences causes attitudinal regression to the mean. The theory explains higher prices in markets to the poor and less educated and so motivates re-examination of previously proposed solutions to the poor performance of those markets.
    Keywords: decision-making, imperfect competition, location models, endogenous tastes
    JEL: D03 D11 L10
    Date: 2016–03–20
  7. By: Matthias Greiff (University of Giessen); Henrik Egbert (Anhalt University of Applied Sciences)
    Abstract: We review a large number of empirical studies on Pay-What-You-Want (PWYW) pricing. We distinguish between laboratory experiments, field experiments, survey experiments and case studies. Based on this survey we identify the following two gaps in the recently flourishing literature on PWYW pricing: (1) studies on PWYW pricing for goods with high cost, and (2) studies on the long-term effects of PWYW pricing.
    Keywords: Pay-What-You-Want, PWYW, pricing mechanism, survey, empirical studies
    JEL: C90 D12 D49 M21 M30
    Date: 2016
  8. By: Filipova-Rivers, Magdalena
    Abstract: Up until the financial crisis of 2007 - 2009, the global economy was adding an estimated 150 million new consumers of financial services each year. The rates of increase have since slowed down, but the growth continues. Most of the new consumers are in developing and emerging economies, where consumer protection and financial literacy are still in their infancy and where consumers are faced with an array of new financial products despite their relatively low familiarity with financial matters. The level of understanding of financial issues is too low there, with negative consequences for both individuals and economies. The common definition of ‘financial capability’ refers to the ability of consumers to gather, compare and use relevant information in acquiring financial services. Financial education is seen as the key intervention which reduces financial ignorance and improves the consumers’ position on the financial market. Several high-income countries have established national financial capability strategies and many other middle-, and low-income countries have also started implementing such policies. As a result of demographic, economic and policy changes, the needs of both the European citizens and the financial products themselves have grown in complexity. This, coupled with the deregulation and globalisation of the financial markets, poses not only considerable opportunities but also threats for the financial wellbeing of individuals and households. If left unattended, changes in the financial system can also pose a variety of risks to society, which will bear the costs arising from market inefficiency. This further highlights the importance of consumer protection and financial literacy for ensuring confidence in the financial system (which is also relevant for Bulgaria and Romania) and for increasing financial inclusion. In April 2010 the World Bank commissioned two nation-wide surveys of the levels of financial literacy in both Romania and Bulgaria. The main objective of these surveys was the establishment of a well-targeted national program for financial education. The data obtained from the respective surveys form the basis for the comparative study on financial capability and consumer protection in Bulgaria and Romania, which is the focus of this report. The purpose of this paper is to define the main challenges as regards consumer protection in the financial services sector in Bulgaria and Romania. The survey revealed several important problems that need further policy consideration. One main observation is that the financial sector in both Bulgaria and Romania is underutilized; it is comprised mainly of banking services such as debit cards and consumer loans. Outside the banking system only insurance and, to a certain degree, leasing services enjoy popularity. Furthermore, it can be inferred that large proportions of the populations of both countries are not involved in the formal financial sector, whilst those who are, are of relatively low financial literacy. Such tendencies limit individuals’ access to financial services and in turn have economy-wide implications in terms of hampered growth of the sector. The next section (part two) discusses conceptual issues and literature related to financial capability in the broader context. In part three we look at the case for comparison between Bulgaria and Romania. Part four of the study deals with data from the respective surveys conducted in Bulgaria and Romania and seeks to draw parallels between the two countries on the questions of: financial status and money management, financial product usage and trust in institutions, and staying informed. Section five offers a summary of the preceding data discussion before concluding with some country-specific policy recommendations.
    Keywords: financial education, indebtedness, consuer protection, financial literacy
    JEL: G0 I25
    Date: 2016
  9. By: Brueckner, Jan; Fu, Shihe; Gu, Yizhen; Zhang, Junfu
    Abstract: This paper develops a new approach for measuring the stringency of a major form of land-use regulation, building-height restrictions, and it applies the method to an extraordinary dataset of land-lease transactions from China. Our theory shows that the elasticity of land price with respect to the foor-area ratio (FAR), an indicator of the allowed building height for the parcel, is a measure of the regulation's stringency (the extent to which FAR is kept below the free-market level). Using a national sample, estimation that allows this elasticity to be city-specific shows substantial variation in the stringency of FAR regulation across Chinese cities, and additional evidence suggests that stringency depends on certain city characteristics in a predictable fashion. Single-city estimation for the large Beijing subsample, where site characteristics can be added to the regression, indicates that the stringency of FAR regulation varies with certain site characteristics, again in a predictable way (being high near the Tiananmen historical sites). Further results using a different dataset show that FAR limits in Beijing are adjusted in response to demand forces created by new subway stops.
    Keywords: Floor-area ratio, density restriction, urban development
    JEL: R14 R52
    Date: 2016–03–23
  10. By: Jean J. Gabszewicz (CORE, Université Catholique de Louvain); Marco A. Marini (Università La Sapienza, Roma); Ornella Tarola (Università La Sapienza, Roma)
    Abstract: In this paper, we tackle the dilemma of pruning versus proliferation in a vertically differentiated oligopoly under the assumption that some firms collude and control both the range of variants for sale and their corresponding prices, likewise a multiproduct firm. We analyse whether pruning emerges and, if so, a fighting brand is marketed. We find that it is always more profitable for colluding firms to adopt a pricing strategy such that some variants are withdrawn from the market. Under pruning, these firms commercialize a fighting brand only when facing competitors in a low-end market. The same findings do not hold when firms are horizontally differentiated along a circle.
    Keywords: Vertically Differentiated Markets, Cannibalization, Market Pruning, Price Collusion
    JEL: D42 D43 L1 L12 L13 L41
    Date: 2016–03
  11. By: Caruso, Raul; Addesa, Francesco; Di Domizio, Marco
    Abstract: This paper investigates the determinants of TV audience for Italian soccer. After a review of the literature concerning the key factors driving the demand for sport, we analyse SKY’s audience figures for 7 Serie A seasons (from 2008-09 to 2014-15). Applying different OLS specifications, we show that Italian viewers have a committed behaviour and outcome uncertainty does not have a significant impact on TV audience. In addition, when choosing whether to watch a match of teams other than their favourite team, Italian consumers appear to be particularly attracted by both the aggregate quantity of talent present and by matches involving teams at the top of the table. This suggests that, in the Italian context, an increase in the TV demand is mainly driven by an enhancement in the performance of top clubs and in the quality of the entertainment rather than in competitive balance.
    Keywords: Broadcasting; Soccer; TV Demand; Uncertainty of Outcome hypothesis; Talent; Serie A.
    JEL: D12 D7 L25 L83
    Date: 2016–03
  12. By: Uwe Jirjahn
    Abstract: Examinations on the determinants of profit sharing usually focus on objective firm characteristics. Using data from manufacturing firms in Germany, this study shows that managers’ subjective attitudes towards profit sharing also play an important role in the adoption and termination of this payment scheme. Positive management attitudes are associated with an increased likelihood of adopting profit sharing. While to some extent this entails failed experimentation, positive managerial attitudes also substantially contribute to a sustained use of profit sharing. The pattern of results holds even when controlling for a variety of objective firm characteristics.
    Keywords: Profit sharing, management attitude, management discretion, subjective factors, experimentation
    JEL: J33 M52
    Date: 2016
  13. By: Halkos, George; Skouloudis, Antonios
    Abstract: Corporate social responsibility (CSR) footprints in terms of relevant policies, plans and programs are evident at a global scale, but the level of national uptake and penetration differs, as countries differ considerably in terms of institutional efficiency. With this in mind, the purpose of this study is to investigate the relationship between CSR penetration and institutional conditions that shape and define the macroeconomic environment and development dynamics of countries. Building on Campbell's (2007) seminal framework on institutional parameters that facilitate effective CSR management, we offer new findings on the national specificity of CSR and additional perspectives for future research on the political economy of responsible business conduct.
    Keywords: Corporate social responsibility (CSR); national institutions; national index; cross-country analysis.
    JEL: F55 L25 Q50 Q58 Q59
    Date: 2016–03
  14. By: Fulvio Castellacci (TIK Centre, University of Oslo); Magnus Gulbrandsen (TIK Centre, University of Oslo); Jarle Hildrum (Telenor Research); E. Martinkenaite (Telenor Research); Erlend Simensen (TIK Centre, University of Oslo); Vegard Tveito (TIK Centre, University of Oslo)
    Abstract: This paper investigates how innovation differs across a company’s business functions. We argue that employees working in different functions of a corporation (e.g. marketing, R&D, top management) differ in terms of the types of innovation they are engaged in, the strategies they adopt to organize their innovative activities, and the factors that spur or hamper their innovation performance. Little is known about this issue, however, which we investigate by making use of a rich novel dataset at the employee-level for the multinational company Telenor. We combine a large survey among nearly 16,000 Telenor employees with an extensive qualitative data collection through interviews in different business units and functions. The empirical results point out the relevance of climate and culture, quality-oriented tasks and external interactions as the key factors supporting employees’ innovation activities. The effects of these factors on innovation are substantially different across business functions of the company.
    Date: 2016–03
  15. By: Yves Jégourel
    Abstract: La potasse constitue, avec le phosphate et l’azote, l’un des trois nutriments utilisés dans la fabrication d’engrais. Si les facteurs qui influencent sa demande sont pour la plupart communs aux autres fertilisants et en large partie déterminés par la conjoncture des marchés agricoles, son offre répond quant à elle à des facteurs propres. Longtemps connu pour être contrôlé par deux cartels de production et d’exportation, le marché de la potasse a connu une évolution majeure en 2013 marquée par la fin d’une entente russo-bélarusse. Dans un contexte économique dégradé, cette rupture se traduit par l’amorce d’une guerre des prix, à l’image de ce que l’on observe pour d’autres matières premières, telles que le minerai de fer.
    Keywords: Potasse, prix, matières premières, engrais, agriculture, développement
    Date: 2016–03
  16. By: Yang, Jinrui
    Abstract: This paper focuses on innovation for new product with exogenously determined horizontal difference from initial product which is provided either by a monopolist or by competitive firms. The innovator, no matter initially under monopoly or competition, will be unique producer of new product and need decide quality of new product which is correlated with investment for innovation. The paper through a model shows that for horizontally similar new product, competition is superior to monopoly to innovate. However, for typical horizontally differentiated product, a monopolist would choose higher quality and invest more than a competitive innovator does if innovation is complex, but brings about lower endogenous quality than the innovator initially under competition does if innovation is easy. Monopoly can support sales of new product with higher price of initial product, but also hamper product innovation to avoid erosion of initial profit. If it is presumed that complexity of innovation is always huge at the beginning, monopoly is more likely to generate innovation for horizontally different product while competition for similar product, respectively compared to each other.
    Keywords: product innovation; horizontal difference; monopoly; competition; complexity of innovation
    JEL: D8 L1 O3 O31
    Date: 2016–03–17

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