nep-mkt New Economics Papers
on Marketing
Issue of 2016‒09‒11
five papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. A Second-degree Price Discrimination by a Two-sided Monopoly Platform By Jeon, Doh-Shin; Kim, Byung-Cheol; Menicucci, Domenico
  2. Evaluating successful strategies in creation of innovative services in hospitality By Slobodan Ivanović; Luka Perman; Jelena Komšić
  3. Compatibility Choices under Switching Costs By Jeon, Doh-Shin; Menicucci, Domenico; Nasr, Nikrooz
  4. A Leverage Theory of Tying in Two-Sided Markets By Choi, Jay; Jeon, Doh-Shin
  5. Does Online Search Predict Sales? Evidence from Big Data for Car Markets in Germany and the UK By Georg von Graevenitz; Christian Helmers; Valentine Millot; Oliver Turnbull

  1. By: Jeon, Doh-Shin; Kim, Byung-Cheol; Menicucci, Domenico
    Abstract: In this article we study second-degree price discrimination by a two-sided monopoly platform. We find novel distortions that arise due to the two-sidedness of the mar- ket. They make the standard result \no distortion at top and downward distortion at bottom" not holding. They generate a new type of non-responsiveness, different from the one found by Guesnerie and Laffont (1984). We also show that the platform may mitigate or remove non-responsiveness at one side by properly designing price discrimi- nation on the other side. These findings help to address our central question, i.e., when price discrimination on one side substitutes for or complements price discrimination on the other side. As an application, we study the optimal mechanism design for an advertising platform mediating advertisers and consumers.
    Keywords: (second-degree) price discrimination, two-sided markets, non-responsiveness, type reversal, advertising
    JEL: D4 D82 L5 M3
    Date: 2016–09
  2. By: Slobodan Ivanović (Faculty of Tourism and Hospitality Management, Opatija, University of Rijeka, Croatia); Luka Perman (Faculty of Tourism and Hospitality Management, Opatija, University of Rijeka, Croatia); Jelena Komšić (Faculty of Tourism and Hospitality Management, Opatija, University of Rijeka, Croatia)
    Abstract: Purpose – The purpose of this paper is to examine manager attitudes about innovative processes in Croatian hospitality and to compare the research results with previous research. Customers in hospitality – guests, have low levels of brand loyalty, they are always looking for the best value, and service innovations can make benefits for hospitality firms. Methodology – The objective of this research was to discover what factors impact the performance of innovation processes. The study took place in Croatian regions Istria and Kvarner which represent a benchmark of Croatian tourism. A survey was performed to examine manager attitudes of hotel innovation, and it used a five-point Likert-type scale measuring levels of agreement with the given statements. Findings – The research results reveal that new service development success for innovative new services depends on four key factors (Service product, Market, Process and Organizational), which are the focus of this research. The study results are limited with regard to generalizability since the study was conducted only in four and five-star hotels in the regions Istria and Kvarner resulting in a small sample size and a weak statistical analysis. Contribution – Managers involved in processes of new service development are tied to the key success features and innovative or new service development (NSD) increases the likelihood of success. The findings present the foundation for future scientific research. The analysis provided guidance for organizational leaders in designing the process to address critical paths or control points to increase the likelihood of successful implementation.
    Keywords: innovation, new services, success, hospitality, statistical analysis, Croatia
    JEL: L83
    Date: 2016–04
  3. By: Jeon, Doh-Shin; Menicucci, Domenico; Nasr, Nikrooz
    Abstract: e study firms’ compatibility choices in the presence of consumers’ switching costs. We analyze both a model of once-and-for-all compatibility choices and that of dynamic choices. Contrary to what happens in a static setting in which firms embrace compatibility to soften the current competition (Matutes and Régibeau, 1988), when consumer lock-in arises due to a significant switching cost, firms make their products incompatible in order to soften future competition, regardless of the model we consider. This reduces consumer surplus and social welfare.
    Keywords: Compatibility, Incompatibility, Switching Cost, Lock-in
    JEL: D43 L13 L41
    Date: 2016–09
  4. By: Choi, Jay; Jeon, Doh-Shin
    Abstract: Partly motivated by the recent antitrust investigations concerning Google, we develop a leverage theory of tying in two-sided markets. We analyze incentives for a monopolist to tie its monopolized product with another product in a two-sided market. Tying provides a mechanism to circumvent the non-negative price constraint in the tied product market without inviting an aggressive response as the rival firm faces the non-negative price constraint. We identify conditions under which tying in two-sided markets is pro?table and explore its welfare implications. Our mechanism can be more widely applied to any markets in which sales to consumers in one market can generate additional revenues that cannot be competed away due to non-negative price constraints.
    Keywords: Tying, Leverage of monopoly power, Two-sided markets,Zero pricing, Non-negative pricing constraint
    JEL: D4 L1 L5
    Date: 2016–09
  5. By: Georg von Graevenitz; Christian Helmers; Valentine Millot; Oliver Turnbull
    Abstract: We use online search data to predict car sales in the German and UK automobile industries. Search data subsume several distinct search motives, which are not separately observable. We develop a model linking search motives to observable search data and sales. The model shows that predictions of sales relying on observable search data as a proxy for prepurchase search will be biased. We show how to remove the biases and estimate the effect of pre-purchase search on sales. To assist identification of this effect, we use the introduction of scrappage subsidies for cars in 2008/2009 as a quasi-natural experiment. We also show that online search data are (i) highly persistent over time, (ii) potentially subject to permanent shocks, and (iii) correlated across products, but to different extent. We address these challenges to estimation and inference by using recent econometric methods for large N, large T panels.
    Keywords: Online search, Google Trends, Serial correlation, Non-stationarity, Common Correlated Effects, Large Panels
    JEL: D
    Date: 2016–08

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