nep-mkt New Economics Papers
on Marketing
Issue of 2017‒01‒08
ten papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. As Seen on TV: Price Discrimination and Competition in Television Advertising By Gil, Ricard; Riera-Crichton, Daniel; Ruzzier, Christian
  2. Models of Consumer Demand for Differentiated Products By Bonnet, Céline; Richards, Timothy
  3. Another model of sales. Price discrimination in a differentiated duopoly market By Mehlum, Halvor
  4. Secret contracting in multilateral relations By Rey, Patrick; Verge, T.
  5. Leveling the Playing Field: How Campaign Advertising Can Help Non-Dominant Parties By Horacio A. Larreguy; John Marshall; James M. Snyder, Jr.
  6. A tour of regression models for explaining shares By Morais, Joanna; Simioni, Michel; Thomas-Agnan, Christine
  7. Vertical price relationships between different cuts and quality grades in the U.S. beef marketing channel: a wholesale-retail analysis By Panagiotou, Dimitrios; Stavrakoudis, Athanassios
  8. The evaluation of tourism satisfaction in island destinations: The case of the Ionian Islands of Greece By Eleni Gaki; Stella Kostopoulou; Evangelia Parisi; Dimitris Lagos
  9. The Dotcom Bubble and Underpricing: Conjectures and Evidence By Pinheiro, Roberto; de Carvalho, Antonio Gledson; Sampaio, Joelson Oliveira
  10. A Theory of Bundling Advertisements in Media Markets By Kevin M. Murphy; Ignacio Palacios-Huerta

  1. By: Gil, Ricard; Riera-Crichton, Daniel; Ruzzier, Christian
    Abstract: In this paper we examine the empirical relationship between price discrimination and competition in television advertising. While most empirical papers on the topic document a positive relationship, we find that price discrimination is negatively related to competition (as measured by the number of competing firms), a result that is consistent with conventional wisdom. Our results also show that only incumbent stations (unlike entrants) respond by engaging less in price discrimination when faced with a more competitive environment. Our evidence suggests that incumbents may use price discrimination as a strategic tool to accommodate entry - a strategy that has received scant attention in the existing entry literature.
    Keywords: competition, price discrimination, Spanish television
    JEL: D22 D43 L11 L82
    Date: 2016–12–21
  2. By: Bonnet, Céline; Richards, Timothy
    Abstract: Advances in available data, econometric methods, and computing power have created a revolution in demand modeling over the past two decades. Highly granular data on household choices means that we can model very specific decisions regarding purchase choices for differentiated products at the retail level. In this chapter, we review the recent methods in modeling consumer demand, and their application to problems in industrial organization and strategic marketing.
    Keywords: consumer demand, discrete choice, discrete-continuous choice, shopping basket models, machine learning.
    JEL: D43 L13 L81 M31
    Date: 2016–12
  3. By: Mehlum, Halvor (Dept. of Economics, University of Oslo)
    Abstract: Using a model of horizontal differentiation where a variety dimension is added to Hotelling's (1929) "linear city" duopoly model, I show that even when costs and demand are symmetric, price discrimination may be an equilibrium phenomenon. In the model each customer have a preferred variety and a preferred firm. They have perfect information about all prices and may be induced to switch variety and firm given a sufficient price difference. Price discrimination equilibrium exists when a sufficient fraction of consumers are elastic both with respect to variety and firm.
    Keywords: Duopoly; price discrimination
    JEL: D43
    Date: 2016–09–23
  4. By: Rey, Patrick; Verge, T.
    Abstract: We develop a flexible and tractable framework of (secret) vertical contracting between multiple upstream suppliers and downstream retailers. This framework does not put any restriction on the tari¤s that can be negotiated, and yet does take account of the impact of these tariffs on downstream firms'behavior. We show that equilibrium tariffs must be cost-based; as a result, retail prices are the same as with a multi-brand oligopoly. Interestingly, this finding is in line with the empirical analysis of a recent Norwegian merger. We then use this flexible framework to endogenize market structure as well as to analyze the e¤ects of various vertical restraints, such as resale price maintenance and retail price parity clauses. Finally, we show that our framework also applies to the agency relationships that characterize most online platforms.
    Keywords: Bilateral contracting, vertical relationships, agency, resale price maintenance, price parity clauses.
    Date: 2016–12
  5. By: Horacio A. Larreguy; John Marshall; James M. Snyder, Jr.
    Abstract: Voters are often uncertain about and biased against non-dominant political parties. By reducing the information gap with dominant parties, political advertising may thus disproportionately benefit non-dominant parties electorally. We test this argument in Mexico, where three main parties dominate many localities. To identify the effects of exposure to partisan advertising, we exploit differences across neighboring precincts in campaign ad distributions arising from cross-state media coverage spillovers induced by a 2007 reform that equalized access to ad slots across all broadcast media. Our results show that ads on AM radio increase the vote shares of the PAN and PRD, but not the previously-hegemonic PRI. Consistent with our model, campaign advertising is most effective in poorly informed and politically uncompetitive electoral precincts, and against locally dominant parties of intermediate strength.
    JEL: D72
    Date: 2016–12
  6. By: Morais, Joanna; Simioni, Michel; Thomas-Agnan, Christine
    Abstract: This paper aims to present and compare statistical modeling methods adapted for shares as dependent variables. Shares are characterized by the following constraints: positivity and sum equal to 1. Four types of models satisfy this requirement: multinomial logit models widely used in discrete choice models of the econometric literature, market-share models from the marketing literature, Dirichlet covariate models and compositional regression models from the statistical literature. We highlight the properties, the similarities and the differences between these models which are coming from the assumptions made on the distribution of the data and from the estimation methods. We prove that all these models can be written in an attraction model form, and that they can be interpreted in terms of direct and cross elasticities. An application to the automobile market is presented where we model brand market-shares as a function of media investments in 6 channels in order to measure their impact, controlling for the brands average price and a scrapping incentive dummy variable. We propose a cross-validation method to choose the best model according to different quality measures.
    Keywords: Multinomial logit; Market-shares models; Compositional data analysis; Dirichlet regression.
    JEL: C10 C25 C35 C46 D12 M31
    Date: 2016–12
  7. By: Panagiotou, Dimitrios; Stavrakoudis, Athanassios
    Abstract: The present article offers an empirical assessment of the degree and the structure of price dependence between wholesale and retail market levels in the U.S. beef industry, while accounting for product differentiation. This is pursued using the statistical tool of copulas and monthly rates of price changes for different cuts and quality grades of the beef product for the time period 2002–2016. Six wholesale–retail pairs were formed based on different cuts and quality grades. The empirical results suggest that prices at retail level respond differently to extreme negative and positive wholesale price shocks. More specifically, extreme price increases at the wholesale level are transmitted to the retail level in five out of six pairs whereas extreme price decreases are not passed from the wholesale to the retail market level in five out of six pairs. Based on these findings, there is evidence of asymmetric price relationships between wholesale–retail market levels in the U.S. beef marketing channel, when quality differences in cuts and grades is considered.
    Keywords: Price relationships; Beef cuts; Wholesale-Retail; Asymmetries; Copulas
    JEL: C14 L66 Q13
    Date: 2017–01–04
  8. By: Eleni Gaki; Stella Kostopoulou; Evangelia Parisi; Dimitris Lagos
    Abstract: Tourism satisfaction is one of the most important components in the analysis of tourism behavior as, it not only affects the choice of tourism destination and the consumption of products, but also affects tourist?s future decision to return to the same destination. The main objective of this paper is to investigate the satisfaction of tourists visiting the Ionian Islands of Greece through quantitative methods that capture the factors influencing tourists? satisfaction and their choice to revisit those destinations, the relationship between them and the consideration of the causes that shape tourism behavior. Field research was conducted at four Ionian islands, namely Corfu, Zakynthos, Lefkada and Kefalonia. Those islands have functional interdependencies and are sensitive to influences from mainland regions. The conclusions of the research reveal the factors that affect tourism satisfaction, the relationships among those factors, the relationship between satisfaction and the revisit to a destination, the assessment of satisfaction according to the segmentation of tourists regarding their motive, the usability of information in satisfaction and the impact of the tourism experience in travel behavior. The tourism policy recommendations arising from the results of this research can lead to the diversification and the enrichment of the tourism product, but also to a further increase of the satisfaction of tourists visiting the Ionian Islands in Greece.
    Keywords: tourism satisfaction; tourism behavior; market segmentation; Ionian Islands of Greece
    JEL: L L O R Y Z3 Z32 Z
    Date: 2016–12
  9. By: Pinheiro, Roberto (Federal Reserve Bank of Cleveland); de Carvalho, Antonio Gledson (Fundação Getulio Vargas, School of Business at São Paulo); Sampaio, Joelson Oliveira (Fundação Getulio Vargas, School of Economics at São Paulo)
    Abstract: We provide conjectures for what caused the price spiral and the high underpricing of the dotcom bubble of 1999–2000. We raise two conjectures for the price spiral. First, given the uncertainty about the growth opportunities generated by the new technologies and their spillover effects across technology industries, investors saw the inflow of a large number of high-growth firms as a sign of high growth rates for the market as a whole. Second, investors interpreted the wave of highly underpriced IPOs as an opportunity to obtain gains by investing in newly public companies. The underpricing resulted from the emergence a large cohort of firms racing for market leadership. Fundamentals pricing at the IPO was part of their strategy. We provide evidence for our conjectures. We show that returns on NASDAQ composite index are explained by the flow of high-growth (or highly underpriced) IPOs; the high underpricing can be fully explained by firms’ characteristics and strategic goals. We also show that, contrary to alternatives explanations, underpricing was not associated with top underwriting, there was no deterioration of issuers’ quality, and top underwriters and analysts became more selective.
    Keywords: Internet bubble; underpricing; spinning; analyst lust; risk composition hypothesis;
    JEL: G14 G24 L1 O33
    Date: 2016–12–21
  10. By: Kevin M. Murphy; Ignacio Palacios-Huerta
    Abstract: Watching TV and other forms of media consumption represent, after sleeping and working, the main activity that adults perform in developed countries. We present a dynamic theory of commercial broadcasting where the media trade utility-raising goods (programs, information, and services) with audiences in exchange for their exposure to advertisements (utility-decreasing bads), and where goods are otherwise free to the audience except for their opportunity cost of time. Goods and bads are dynamically arranged, and as such traded in an intertemporal bundle. No monetary transfers take place between media and audiences, and this barter exchange is not contractually sustained. We study this dynamic problem in a model that captures the central characteristics of how commercial media markets operate. The model is rich enough to account for a variety of disparate evidence in television, radio, print media and the web.
    JEL: D11 D21 L21 L82
    Date: 2016–12

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