nep-mkt New Economics Papers
on Marketing
Issue of 2016‒05‒28
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Understanding Markets and Marketing Strategies, and Challenges in Locally Grown Fresh Produce Industry By Gumirakiza, J. Dominique; Hopper, Laura
  2. Assessing the performance of food co‐ops in the US By Alia, Didier; Katchova, Ani; Woods, Timothy A.
  3. Consumers' Costly Response to Product Safety Threats By Ferrer, Rosa; Perrone, Helena
  4. Excessive Competition for Headline Prices By Inderst, Roman; Obradovits, Martin
  5. The Welfare Eff ects of Vertical Integration in Multichannel Television Markets By Crawford, Gregory S.; Lee, Robin S.; Whinston, Michael; Yurukoglu, Ali
  6. Functions of Retailing By Babulia Mghebrishvili; EKATERINE UROTADZE
  7. Buying frenzies in durable-goods markets By Ting Liu; Pasquale Schiraldi
  8. E-commerce in Europe: parcel delivery prices in a digital single market By J. Scott Marcus; Georgios Petropoulos
  9. The impact of the market transparency unit for fuels on gasoline prices in Germany By Dewenter, Ralf; Heimeshoff, Ulrich; Lüth, Hendrik
  10. How does Insurance affect the Price of Drugs: A Graphical Analysis By Audrey Laporte; Brian Ferguson
  11. Assessing Firm Behavior in Carve-out Markets: Evidence on the Impact of Carve-out Policy By Gayle, Philip; Thomas, Tyson
  12. Consumers’ Willingness to Pay for Genetically Engineered Edamame By Wolfe, Elijah; Popp, Michael; Bazzani, Claudia; Nayga Jr, Rudolfo; Danforth, Diana; Popp, Jennie; Chen, Pengyin; Seo, Han-Seok
  13. The Food Access Environment and Food Purchase Behavior of SNAP Households By James Mabli; Julie Worthington

  1. By: Gumirakiza, J. Dominique; Hopper, Laura
    Abstract: Existing literature on locally grown food systems is extensive and spread. Navigating it can be tedious. This study uses an exploratory research approach to identify common findings and recommendations, and propose priorities, key variables, and relationships for future studies. Findings show that local food marketing through farmers’ markets and Community Supported Agriculture and the benefits of local food systems to local economies (found to be an on-going debate) dominate the literature heavily. Prior studies commonly reported enthusiasm for locally grown fresh produce, but present diverging results about significant consumer characteristics. Studies regarding marketing decisions among food growers/marketers, local foods supply chains, online markets for local food products, and the use of marketing mix tool are relatively limited. This study is helpful to researchers by directing their activities towards addressing major gaps. In addition, this study facilitates growers/marketers—especially those who are interested in implementing research-based recommendations—by providing a complied one-stop point of information. Likewise, stakeholders including community-based organizations and policy makers will find this study beneficial to their involvement in the industry.
    Keywords: Local food movement, farmers' markets, CSA programs, local foods supply chain, Agribusiness,
    Date: 2016–01–21
  2. By: Alia, Didier; Katchova, Ani; Woods, Timothy A.
    Abstract: Food cooperatives (co-ops) as a key component of the local food network play an increasingly important role in the US food system. Co-ops use various strategies to promote local products, ensure a greater commitment of members, and the rofitability and sustainability of the business. This paper assessed the effectiveness of these strategies as perceived and appreciated by co-ops' members using survey data from a national study on eight large food cooperatives in the U.S. The survey identifies a wide range of attributes related to store and product characteristics, and marketing and management strategies. It asks interviewees to rank their co-op on these attributes on a Likert-scale of 0-4. Using Principal Component Analysis, we aggregate and combine information from the large number of rankings into a six major categories. Next, exploiting the hierarchical structure of the data with members nested within their respective co-ops, we use Hierarchical Linear Modeling methods to identify the factors that determine the perceived performance of co-ops. The results show that in general member has a strong positive perception of the performance of their co-ops in term of quality of the products, quality of the management and the service, and the physical quality of the store. We also find there is a lot heterogeneity among co-ops and member socio-demographic and economic characteristics are strongly correlated with their perception.
    Keywords: Food Network, Food Co-ops Performances, Hierarchical Linear Model, Agribusiness, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2016–02
  3. By: Ferrer, Rosa; Perrone, Helena
    Abstract: This paper investigates how consumers react to product safety threats when there are no close substitutes for the unsafe product. Our main goal is to study the total costs of the crisis to consumers including the utility losses associated with substituting away from their favorite products, and to derive policy implications. Using data from an ideal setting related to mad cow disease, we estimate a full demand model for meat and identify the utility parameters that weight the importance of product safety relative to other product characteristics. We find that the consumers' response leads to utility losses and nutritional costs due to changes in the composition of the food basket. Counterfactual exercises isolate the different drivers of the consumers' reaction, measuring the contributions of these factors and identifying conditions that would have intensified the decline in demand. Based on our results, public intervention can play a stronger role in terms of complementing market incentives when the threat affects products for which consumers' response is costlier.
    Keywords: consumer welfare; Demand estimation; scanner data
    JEL: K13 L66
    Date: 2016–05
  4. By: Inderst, Roman; Obradovits, Martin
    Abstract: When firms' shrouding of charges, as in Gabaix and Laibson (2006), meets with consumers' salient thinking, as in Bordalo et al. (2013), this can have severe welfare implications. The ensuing excessive competition for headline prices tends to inefficiently bias consumers' choice towards low-quality products, which is compounded when firms react and reduce quality beyond what would be cost efficient. As more intense shopping leads to a greater pass through of shrouded charges into lower headline prices, which aggravates the problem, competition policy is no substitute for consumer protection policy. While in our model all consumers are potential victims of salient thinking and shrouded charges, salient thinking becomes effective only for those who are attentive to different offers. Attentive consumers are likely to show ex-post regret and they can be ex-ante worse off, even though their choice set is larger. The combination of shrouding and salient thinking can sufficiently disadvantage high-quality firms so as to make them willing to educate consumers and unshroud all charges. While there is no unshrouding on equilibrium, high-quality firms' threat of unshrouding may sufficiently discipline firms to make efficient product choices.
    Keywords: attention; hidden fees; price competition; salience; shopping; shrouded charges; unshrouding
    JEL: D11 D18 D21 D43 D60 L11 L13 L15
    Date: 2016–05
  5. By: Crawford, Gregory S.; Lee, Robin S.; Whinston, Michael; Yurukoglu, Ali
    Abstract: We investigate the welfare effects of vertical integration of regional sports networks (RSNs) with programming distributors in U.S. multichannel television markets. Vertical integration can enhance efficiency by reducing double marginalization and increasing carriage of channels, but can also harm welfare due to foreclosure and raising rivals' costs incentives. We estimate a structural model of viewership, subscription, distributor pricing, and affiliate fee bargaining using a rich dataset on the U.S. cable and satellite television industry (2000-2010). We use these estimates to analyze the impact of simulated vertical mergers and de-mergers of RSNs on competition and welfare, and examine the efficacy of regulatory policies introduced by the U.S. Federal Communications Commission to address competition concerns in this industry.
    Keywords: cable television; double marginalization; foreclosure; vertical integration
    JEL: L13 L42 L51 L82
    Date: 2016–03
  6. By: Babulia Mghebrishvili (Ivane Javakhishvili Tbilisi State University); EKATERINE UROTADZE (Ivane Javakhishvili Tbilisi State University)
    Abstract: Retailing plays an important role in the development of Georgia’s economy. In recent years it has changed considerably. Sales volume has increased as well as the number of employees in this sphere. According to the international rating regarding retail trading Georgia held the 6th position among 30 countries. In strengthening this position understanding and implementation of the functions of retailing plays an important role along with some other factors. The essence of retailing is expressed in its functions, so if the functions are completed properly, the tasks of retailing are usually successfully solved. At present the scientists do not have the same opinion about the functions of retailing. As a result of the analyses of different opinions about the matter, we think that the main function of retailing is delivering of the product through selling and buying to the immediate customer. In order to accomplish this function, all retailers perform certain operations, which are called by us as sub-functions. They are the following: Studying of market conjuncture; Analyses of the demand – supply ratio of certain products; Product buying and formation of product assortment; Storage of products; Price setting for products; Information provision for suppliers and buyers; Selling of the product to the immediate customer.
    Keywords: Retailing, Function, Customer, Supplier.
    JEL: M31
  7. By: Ting Liu; Pasquale Schiraldi
    Abstract: We explain why a durable-goods monopolist would like to create a shortage during the launch phase of a new product. We argue that this incentive arises from the presence of a second-hand market and uncertainty about consumers׳ willingness to pay for the good. Consumers are heterogeneous and initially uninformed about their valuations but learn about them over time. Given demand uncertainty, first period sales may result in misallocation and lead to active trading on the secondary market after the uncertainty is resolved. Trading on the second-hand market will generate additional surplus. This surplus can be captured by the monopolist ex-ante because consumers are forward-looking, and the price they are willing to pay incorporates the product׳s resale value. As a consequence, when selling to uninformed consumers, the monopolist faces the trade-off between more sales today and a lower profit margin. Specifically, because the product׳s resale value is negatively related to the stock of the good in the second-hand market, selling more units today will result in a lower equilibrium price of the product. Therefore, the monopolist may find it optimal to create a shortage and ration consumers to the second period. We characterize conditions under which the monopolist would like to restrict sales and generate buying frenzies.
    Keywords: buying frenzies; second-hand market; durable goods; consumer uncertainty
    JEL: N0 R14 J01 L81
    Date: 2014–08
  8. By: J. Scott Marcus; Georgios Petropoulos
    Abstract: Highlights In its Digital Single Market strategy, the European Commission has rightly noted the importance of reducing the price paid for basic cross-border parcel delivery by consumers and by small and medium size retail senders. The payment flows for cross-border parcel delivery are strikingly similar to those for telecommunications. Comparisons with roaming can be instructive. As with roaming, it is clear that the links between wholesale payments between the national postal operators and retail prices need to be properly understood in order to craft good policy. Another useful lesson is that national postal regulatory authorities are unlikely to address cross-border problems because of limitations in their respective mandates and because they have no incentive to take measures to benefit residents of other countries. There are also significant differences between roaming and parcel delivery. While high wholesale charges were a major driver of high retail prices for international mobile roaming, the wholesale payments for cross-border parcel delivery appear to be below cost. This implies that it is the ‘spread’ between retail price and the wholesale payment that is inflated, at least for small retail senders and for consumers. Comprehensive statistics gathering, coordinated at European level, is indispensable.
    Date: 2016–05
  9. By: Dewenter, Ralf; Heimeshoff, Ulrich; Lüth, Hendrik
    Abstract: Increasing horizontal as well as vertical transparency in oligopolistic markets can be advantageous for consumers, due to reduced search costs. However, market transparency can also affect incentives to deviate from collusive agreements and the punishment by rival firms in the market. Using a panel of 27 European countries, we analyze the impact of increased market transparency via the introduction of a market transparency unit for fuels in Germany. Applying a difference-in-differences approach, we find evidence that both gasoline and diesel prices have increased. While consumers may be better off using a retail price app for fuels, gas stations are also able to compare prices at almost no cost.
    Keywords: market transparency unit,regulation,fuel prices,difference-in-differences
    Date: 2016
  10. By: Audrey Laporte; Brian Ferguson
    Abstract: Prices of drugs differ greatly across countries and to a certain degree across payment agencies within countries (OECD (2015)). It is well known among health economists that the presence of insurance creates a separation between the consumer of pharmaceuticals and the payer. This separation can result in the price of drugs being driven up simply because somebody other than the consumer is responsible for paying for them. The precise impact of insurance on drug prices however, will depend critically on the structure of the insurance, a fact that has tended to get lost in health policy debate. The purpose of this paper is to use diagrammatic analysis of three types of insurance: co-insurance, reference pricing and co-payment, to investigate how each affects the price of prescription drugs. In addition, we analyze the role of a new pricing tool, which has recently been increasingly used by pharmaceutical companies in North America: co-Payment waiver coupons. Among other policy implications, we suggest that the use of co-pay waivers turns the co-payment insurance constraint into something similar to the reference pricing constraint, from the supplier's perspective, but with greater transactions costs.
    Keywords: drug pricing, insurance, pharmaceuticals, co-payment, reference pricing, co-insurance
    Date: 2016–05
  11. By: Gayle, Philip; Thomas, Tyson
    Abstract: Airlines wanting to cooperatively set prices for their international air travel service must apply to the relevant authorities for antitrust immunity (ATI). While cooperation may yield benefits, it can also have anti-competitive effects in markets where partners competed prior to receiving ATI. A carve-out policy forbids ATI partners from cooperating in markets policymakers believe will be most harmed by anti-competitive effects. We examine carve-out policy applications to three ATI partner pairings, and find evidence more consistent with cooperative pricing in carve-out markets in spite of the policy, calling into question the effectiveness of the policy in achieving intended market outcomes.
    Keywords: Airline competition; Antitrust immunity; Carve-out Policy
    JEL: L13 L40 L93
    Date: 2016–04–27
  12. By: Wolfe, Elijah; Popp, Michael; Bazzani, Claudia; Nayga Jr, Rudolfo; Danforth, Diana; Popp, Jennie; Chen, Pengyin; Seo, Han-Seok
    Keywords: Edamame, non-hypothetical experimental auction, sensory test, willingness to pay, Agribusiness, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics, Marketing, Q12, D12,
    Date: 2016
  13. By: James Mabli; Julie Worthington
    Abstract: This study describes the food access environment and food purchase behavior of Supplemental Nutrition Assistance Program (SNAP) households using data from the SNAP Food Security Survey, the largest and most recent national survey of SNAP participants to date.
    Keywords: food access , SNAP , Food Stamp Program , Supplemental Nutrition Assistance Program , food shopping , GIS , spatial analysis , geographic access
    JEL: I0 I1

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