nep-mkt New Economics Papers
on Marketing
Issue of 2017‒06‒11
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Targeted Advertising and Costly Consumer Search By Roberto Burguet; Vaiva Petrikaite
  2. To switch or not to switch? Understanding German consumers' willingness to pay for green electricity tariff attributes By Sauthoff, Saramena; Danne, Michael; Mußhoff, Oliver
  3. Vertical Integration and Product Availability in the Movie Theater Industry By In Kyung Kim; Vladyslav Nora
  4. Stepping up the game: The role of innovation in the sharing economy By Demary, Vera
  5. Is DLT the Cure for the Omni-Channel Blues? A Provocation By Bernardo Batiz-Lazo
  6. Duopolistic competition in markets where consumers have switching costs By Guillem Roig
  7. Modell eines selbstregulierenden, räumlich ausgedehnten Marktplatzes für Rohstoffhandel By Michaelis, Björn

  1. By: Roberto Burguet; Vaiva Petrikaite
    Abstract: We study a market with horizontally differentiated products and sequential consumer search. Firms send adverts to consumers to inform about their existence. Advertising may be either random or targeted. Targeting increases search intensity, which intensifies competition. However, targeted consumers draw higher valuations on average, which creates incentives to raise prices. The first effect dominates when search costs are sufficiently low, but the second may prevail when search costs are high. As a result, with high search costs, targeting results in higher prices and lower consumer surplus, while the opposite holds true when search costs are low. A larger advertising cost helps firms segment the market if they can target adverts.
    Keywords: random advertising, targeted advertising, horizontal differentiation, sequential search
    JEL: L13 D83
    Date: 2017–06
  2. By: Sauthoff, Saramena; Danne, Michael; Mußhoff, Oliver
    Abstract: In order to achieve an environmentally friendly and sustainable energy supply, it is necessary that this goal is supported by society. In different countries worldwide it has been shown that one way consumers want to support the energy transition is by purchasing green electricity. However, few people make the leap from their intention to a buying decision. This study explores parameters that influence whether German consumers decide to switch to a green electricity tariff. We conducted a quota-representative online survey including a discrete choice experiment with 371 private households in Germany in 2016. For the econometric analysis, a generalized multinomial logit model in willingness to pay (WTP) space was employed, enabling the estimation of WTP values to be as realistic as possible. The results show that consumers' decision regarding whether or not to make the switch to green energy is influenced by many underlying drivers, such as the source of green energy, whether a person can outsource the switching process, and a person's attitude towards the renewable energy sources levy that currently exists in Germany. Implications for policy makers and recommendations for the marketing of green energy tariffs are provided.
    Keywords: energy transition,green energy,tariff switch,discrete choice experiment,generalised multinomial logit model,WTP space
    Date: 2017
  3. By: In Kyung Kim (Nazarbayev University); Vladyslav Nora (Nazarbayev University)
    Abstract: We examine the effects of integration between distribution and exhibition on product mix and availability in the movie theater industry. Our model predicts that integrated theaters engage in foreclosure, but also have higher incentives to acquire demand information. We estimate that integrated theaters allocate more seats to their own titles, mostly at the expense of small independent movies. However, we find that despite this foreclosure effect integrated theaters match demand better turning away significantly fewer consumers and achieving higher consumer welfare than independent theaters. Our results suggest that the efficiency gains of vertical integration dominate the losses from foreclosure.
    Keywords: vertical integration, foreclosure, product availability, movie theater industry
    JEL: L13 L22 L82
    Date: 2017–01
  4. By: Demary, Vera
    Abstract: While the sharing economy is generally perceived to be very innovative, it has hardly been analyzed what defines this innovativeness. The main aspect for the sharing economy as a whole is the peer-to-peer (P2P) organization of its businesses. This allows sharing platforms to enter markets more easily, consequently increasing com-petition in these markets. In addition to that, many sharing platforms are also techno-logically innovative or apply a tested concept in a new setting. Increased competition may result in even more innovation in order to keep customers satisfied and boost the benefit these derive from participating in the sharing economy. However, in most affected markets, there is no level playing field yet between the established incum-bents and the new sharing platform entrants. This calls for urgent action on the side of policy-makers to foster innovation in the sharing economy while enabling fair com-petition.
    JEL: L12 L51 L86 O31
    Date: 2017
  5. By: Bernardo Batiz-Lazo (Bangor University)
    Abstract: A current trend in both retailing and retail financial services aims to match customers to their purchases with the least amount of friction. For depositary institutions this entails enabling customers to deal with their financial affairs, including purchases, through whatever channel the customer chooses (branch, ATM, web, mobile, etc.). For merchants, it entails shipping and delivering the purchase when and how the customer chooses (in store, at a desired location, at a pick-up point, etc.), while settling outstanding financial claims with the different actors involved in the manufacturing, storage, shipping and distribution network. This essay briefly explores the potential use of distributed ledger technology (DLT) to deliver integrated omni-channel solutions
    Date: 2017–05
  6. By: Guillem Roig
    Abstract: In a dynamic competition model where firms initially share half of the market and consumers have switching costs, consumers' sophistication, lifespan and concentration impact the possibility to set collusive prices. I first show that with strategic long-run consumers, collusion is harder to implement than when consumers are not strategic: with sophisticated consumers, a deviating fi rm can cash-in the rents that a buyer obtains after switching. I then study the consequences of relaxing buyers concentration and show that collusion is then easier to maintain than with non-strategic consumers: with strategic consumers a firm must offer a low price at the moment of deviation as consumers can bene t from increased competition, emerging from an asymmetric market structure, without having to pay switching costs. The paper suggests simple policy recommendations: it does not suffice to educate consumers about the competitive effects of their current purchasing decisions, but central purchasing agencies also need to be promoted.
    Keywords: Switching cost, Price collusion; Strategic consumers
    JEL: D43 L13 L12
    Date: 2017–05–25
  7. By: Michaelis, Björn
    Abstract: The concept of a "Commodity Hub" is extended to the large areas with consumers, who differ in their transport costs. A marketplace operator defines regionalized contract standards, that can reduce price discrimination. For a duopoly, contract standards that are valid in one region react to relative price reductions in this region by expanding the region of their validity, if the marketplace operator wants to maximize its turnover.
    Keywords: Commodity, Hub, contract, market place, industrial economics, Rohstoffe, Vertragsstandard, Marktplatz, Industrieökonomie
    JEL: K21 L1 L13 L14 L92
    Date: 2017–05–17

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