nep-mkt New Economics Papers
on Marketing
Issue of 2016‒07‒09
six papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Ordered Consumer Search By Armstrong, Mark
  2. A game model of competition for market share between a new good producer and a remanufacturer By Batabyal, Amitrajeet; Beladi, Hamid
  3. Pro-Consumer Price Ceilings under Regulatory Uncertainty By Bennett, John; Chioveanu, Ioana
  4. The welfare impacts of discriminatory price tariffs By Nikolaos Danias; J Kim Swales
  5. Cigarette Price Elasticity of Demand for Young Adults in the United States: An Application of Panel Quantile Regression Analysis By Heboyan, Vahe; Hovhannisyan, Vardges
  6. Building functional cities By Vernon Henderson; Anthony J. Venables; Tanner Regan; Ilia Samsonov

  1. By: Armstrong, Mark
    Abstract: The paper discusses situations in which consumers search through their options in a deliberate order, in contrast to more familiar models with random search. Topics include: network effects (consumers may be better off following the same search order as other consumers); the use of price and non-price advertising to direct search; the impact of consumers starting a new search with their previous supplier; the incentive sellers have to merge or co-locate with other sellers; and the incentive a seller can have to raise its own search cost. I also show how ordered search can be reformulated as a simpler discrete choice problem without search frictions.
    Keywords: Consumer search, sequential search, ordered search, directed search, discrete choice, oligopoly, advertising, obfuscation.
    JEL: D21 D43 D83 L11 L15 M37
    Date: 2016–06–24
  2. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We analyze the hitherto unstudied duopolistic interaction between a new good producer and a remanufacturer who compete for a dominant share of the market for a particular product. Each firm i spends d_i ≥ 0 on product development to sway consumers and this expenditure increases the likelihood that firm i captures a dominant market share. The revenue to each firm from obtaining a dominant market share is r>0. Our analysis of this interaction leads to five results. First, given the two product development expenditures (d_1,d_2), we specify the expected profit for each firm i. Second, we describe the function that characterizes each firm’s best response function. Third, we compute the unique Nash equilibrium. Fourth, we show what happens to this Nash equilibrium when the revenue r increases. Finally, we study what happens to the Nash equilibrium when the remanufacturer’s revenue from capturing a dominant market share is still r but the new good producer’s revenue is θ r, where θ >1.
    Keywords: Duopoly, Market Share, Nash Equilibrium, New Good Producer, Remanufacturer
    JEL: D21 L13 L21
    Date: 2016–01–07
  3. By: Bennett, John; Chioveanu, Ioana
    Abstract: We examine optimal price ceilings when the regulator is uncertain about demand and supply conditions and maximizes expected consumer surplus. We consider both a perfectly competitive benchmark and imperfectly competitive settings where symmetric firms compete in supply functions. Our analysis indicates that regulatory uncertainty does not eliminate the scope for intervention with a price ceiling. Instead, sufficient uncertainty calls for softer intervention, with the price ceiling set at a relatively high level. We formalize the relationship between competitive pressure and the optimal price ceiling and show that, if uncertainty is great enough, the optimal price ceiling is increasing in the degree of competition, so that greater competitive pressure justifies less restrictive regulatory intervention. For the perfectly competitive case, we also explore how the optimal price ceiling is related to the level of rationing efficiency, pinning down a cut-off level of efficiency below which a price ceiling should not be used.
    Keywords: price regulation, consumer surplus, uncertainty
    JEL: D4 D8 L5
    Date: 2016
  4. By: Nikolaos Danias (Department of Economics, University of Strathclyde); J Kim Swales (Department of Economics, University of Strathclyde)
    Abstract: This paper looks at the use of asymmetric tariffs as a regulatory instrument. We use a monopolistic market setup with two markets and we introduce price controls in one of the two. The purpose of the regulator is to maximise consumer welfare through this price discriminatory practice. We consider cases where the welfare of the consumers in the two markets is weighted equally and cases where it is not. In some cases we allow for the two markets to be linked through a monopsonistic input market. The paper focuses on the welfare implications of this regulatory approach, with the firm operating under a profit restriction. Results suggest that having only one price-controlled market is in certain cases a good option from a welfare perspective.
    Keywords: D42,D61, I31, I38, L12, L51
    Date: 2016–06
  5. By: Heboyan, Vahe; Hovhannisyan, Vardges
    Keywords: cigarette, quantile regression, demand, Demand and Price Analysis, Health Economics and Policy,
    Date: 2016
  6. By: Vernon Henderson; Anthony J. Venables; Tanner Regan; Ilia Samsonov
    JEL: Q15
    Date: 2016

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