nep-mkt New Economics Papers
on Marketing
Issue of 2016‒11‒27
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Consumer preferences and implicit prices of smartphone characteristics By José A. Montenegro; José L. Torres
  2. Product Variety, Across-Market Demand Heterogeneity, and the Value of Online Retail By Thomas W. Quan; Kevin R. Williams
  3. The Pay-What-You-Want Game and Laboratory Experiments By Greiff, Matthias; Egbert, Henrik
  4. Taxation of a Digital Monopoly Platform By Marc Bourreau; Bernard Caillaud; Romain De Nijs
  5. Changes in Cultural Consumption: Ethnographic Collections in Wikipedia By Trilce Navarrete; Karol Jan Borowiecki
  6. Analysis on lock-in effects by estimating for the switching costs in telecommunications bundles. By Hyungjin Kim; Hyunchul Kim
  7. Pay less, consume more? Estimating the price elasticity of demand for home care services of the disabled elderly By Quitterie Roquebert; Marianne Tenand

  1. By: José A. Montenegro (Department of Computer Science, University of Málaga); José L. Torres (Department of Economics, University of Málaga)
    Abstract: This paper applies the hedonic pricing approach to study the implicit prices of smartphone characteristics and consumer preferences. Currently, mobile phones are the most widespread technological product worldwide and their performance and technical characteristics have changed dramatically over a short period. The development of smartphones has been a revolution in itself in the mobile telecommunication industry, expanding the capabilities of handsets beyond those of a simple mobile phone. Competition between smartphone producers is erce and knowledge concerning consumers' preferences regarding smartphone features is vital to survival in this fast-changing market. This paper uses a hedonic pricing model to estimate the implicit prices of smartphone characteristics. A large set of characteristics are analysed including design, communication, connectivity, camera, display, hardware, multimedia, and power. The characteristics most valued by consumers are the screen, followed by memory, battery capacity, and weight. Consumers are willing to pay up to a 95% premium for an Apple smartphone.
    Keywords: Smartphones, hedonic pricing approach, characteristics' implicit prices, consumer preferences.
    Date: 2016–11
  2. By: Thomas W. Quan (University of Georgia); Kevin R. Williams (Cowles Foundation, Yale University)
    Abstract: Online retail gives consumers access to an astonishing variety of products. However, the additional value created by this variety depends on the extent to which local retailers already satisfy local demand. To quantify the gains and account for local demand, we use detailed data from an online retailer and propose methodology to address a common issue in such data - sparsity of local sales due to sampling and a significant number of local zeros. Our estimates indicate products face substantial demand heterogeneity across markets; as a result, we find gains from online variety that are 30% lower than previous studies.
    Keywords: Product Variety, Demand Estimation, Long Tail, Online Retail
    JEL: C13 L67 L81
    Date: 2016–11
  3. By: Greiff, Matthias; Egbert, Henrik
    Abstract: This paper introduces the Pay-What-You-Want game which represents the interaction between a buyer and a seller in a Pay-What-You-Want (PWYW) situation. The PWYW game embeds the dictator game and the trust game as subgames. This allows us to use previous experimental studies with the dictator and the trust game to identify three factors that can influence the success of PWYW pricing in business practice: (i) social context, (ii) social information, and (iii) deservingness. Only few cases of PWYW pricing for a longer period of time have been documented. By addressing repeated games, we isolate two additional factors which are likely to contribute to successful implementations of PWYW as a long term pricing strategy. These are (iv) communication and (v) the reduction of goal conflicts. The central implication of this study is that the results from experimental economics can provide guidance to developing long-term applications of PWYW pricing.
    Keywords: Pay-What-You-Want; PWYW Game; participative pricing; experiments; reciprocity
    JEL: C90 D11 M21 M31
    Date: 2016–11–22
  4. By: Marc Bourreau (Télécom ParisTech); Bernard Caillaud (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique); Romain De Nijs (Ecole Polytechnique [Palaiseau])
    Abstract: This paper investigates the impact on fiscal revenues of taxing a two-sided mo-nopolistic platform offering personalized services to users and targeted advertising to sellers, based on the collection of users' personal data. We show that the introduction of a small tax on data collection, which has been proposed in the French context by Colin and Collin (2013), fails to increase fiscal revenues if the value added tax (VAT) rate is high enough, due to a tax base interdependence effect between the two taxes. Under a supermodularity condition on the platform's profit function as a function of its prices, this result generalizes to any per-unit tax. However, in some cases, an ad valorem tax on subscriptions or on advertising may raise fiscal revenues, irrespective of the VAT rate, as well as welfare.
    Keywords: two-sided market,digital economy,online advertising,data
    Date: 2016–10–25
  5. By: Trilce Navarrete (Department of Business and Economics, University of Southern Denmark); Karol Jan Borowiecki (Department of Economics, Trinity College Dublin)
    Abstract: Visits to museums have been studied as hedonic and utilitarian forms of cultural consumption, though limited attention has been given to the access of museum collections online. We perform a unique historic analysis of the visibility of collections in a museum of ethnographic collections and compare 100 years of onsite visits to 5 years online visits. We find two main results: first, access to collections increased substantially online. From a selection of objects available both onsite and online, access grew from an average of 156,000 onsite visitors per year to over 1.5 million views online per year. Onsite, 15.5 million people visited the museum in a spam of a century while online, 7.9 million people viewed collections in only the last 5 years. Second, we find a difference in consumer preference for type of object, favouring 3D onsite and 2D online (photographs of objects, particularly when showing them being used). Results support understanding of online heritage consumption and emerging dynamics, particularly outside of an institutional environment, such as Wikipedia.
    Keywords: Heritage consumption, Museums, Digital heritage, Access, Exhibition history, Wikipedia
    JEL: L31 D12 O35 N30 Z11
    Date: 2016–11
  6. By: Hyungjin Kim (Sungkyunkwan University); Hyunchul Kim (Sungkyunkwan University)
    Abstract: As digital convergence is spreading more than ever, the lock-in effects of bundled services in the broadcasting and telecommunication market are receiving considerable attention. Antitrust authorities have questioned whether lock-in effects impede competition in telecommunications markets. However, the answer to this question remains indecisive because few studies have attempted to quantify the switching costs in bundles. We use novel consumer level data to examine switching costs of bundled products. We use the mixed logit model to estimate the demand for bundled packages, which include mobile, Internet, and paid-TV services. We measure switching cost by the decrease in utility when consumers change their service providers from period t-1 to period t. The results show that consumers experience additional costs when they switch from bundles. Our estimates indicate that consumers pay 3,238 KRW (about 3 USD) per month for changing from Double Play Service (paid TV with Internet) to other services and 3,510 KRW for Triple Play Service. The estimates of switching costs are smaller for the bundles without any commitment period requirement. This implies that stipulated service period and penalty intensify the lock-in effects. In the counterfactuals where we remove the penalty for switching from bundles, we find that consumer surplus increases by 3,714 KRW per month. We proposed policies which reduce penalties for cancellations or shorter stipulated service periods in order to reduce switching costs.
    Keywords: Switching costs, Lock-in, Bundles, Mixed logit model
  7. By: Quitterie Roquebert (UP1 - Université Paris 1, Panthéon-Sorbonne - Université Paris I - Panthéon-Sorbonne - Pres Hesam); Marianne Tenand (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC))
    Abstract: Although the consumption of home care is increasing with population ageing, little is known about its price sensitivity. This paper estimates the price elasticity of the demand for home care of the disabled elderly, using the French home care subsidy program ("APA"). We use an original dataset collected from a French District Council with administrative records of APA out-of-pocket payments and home care consumption. Identification primarily relies on inter-individual variations in producer prices. We use the unequal spatial distribution of producers to address the potential price endogeneity arising from non-random selection into a producer. Our results point to a price elasticity around -0.4: a 10% increase in the out-of-pocket price is predicted to lower consumption by 4%, or 37 minutes per month for the median consumer. Copayment rates thus matter for allocative and dynamic efficiencies, while the generosity of home care subsidies also entails redistributive effects.
    Keywords: Long-term Care,Price elasticity,Public policies,Disabled elderly,Censored regression,Dépendance chez la personne âgée,Elasticité-prix,Politiques publiques,Régression censurée
    Date: 2016–08

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