nep-mkt New Economics Papers
on Marketing
Issue of 2017‒08‒20
five papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Consumer Learning and the Entry of Generic Pharmaceuticals By Neha Bairoliya; Pinar Karaca-Mandic; Jeffrey S. McCullough; Amil Petrin
  2. Media See-saws: Winners and Losers in Platform Markets By Anderson, Simon P; Peitz, Martin
  3. Dotcom Extreme Underpricing By Pinheiro, Roberto; de Carvalho, Antonio Gledson; Sampaio, Joelson Oliveira
  4. Impact of Psychological Needs on Luxury Consumption By Mao, N.; McAleer, M.J.; Bai, S.
  5. New Market Creation via Innovation: A Study on Tata Nano By Swati Singh; Manoj Joshi

  1. By: Neha Bairoliya; Pinar Karaca-Mandic; Jeffrey S. McCullough; Amil Petrin
    Abstract: Generic pharmaceuticals provide low-cost access to treatment. Despite their chemical equivalence to branded products, many mechanisms may hinder generic substitution. Consumers may be unaware of their equivalence. Firms may influence consumers through advertising or product line extensions. We estimate a structural model of pharmaceutical demand where consumers learn about stochastic match qualities with specific drugs. Naïve models, without consumer heterogeneity and learning, grossly underestimate demand elasticities. Consumer bias against generics critically depends on experience. Advertising and line extensions yield modest increases in branded market shares. These effects are dominated by consumers’ initial perception bias against generics.
    JEL: I1
    Date: 2017–08
  2. By: Anderson, Simon P; Peitz, Martin
    Abstract: We customize the aggregative game approach to oligopoly to study media platforms which may differ by popularity. Advertiser, platform, and consumer surplus are tied together by a simple summary statistic. When media are ad-financed and ads are a nuisance to consumers we establish see-saws between consumers and advertisers. Entry increases consumer surplus, but decreases advertiser surplus if industry platform profits decrease with entry. Merger decreases consumer surplus, but advertiser surplus tends to increase. By contrast, when platforms use two-sided pricing or consumers like advertising, advertiser and consumer interests are often aligned.
    Keywords: advertising; Aggregative games; Entry; Media economics; mergers
    JEL: D43 L13
    Date: 2017–08
  3. 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 conjecture that the Dotcom abnormal underpricing resulted from the emergence a large cohort of firms racing for market leadership/survivorship. Fundamentals pricing at the IPO was part of their strategy. Consistent with our conjecture, firms’ strategic goals and characteristics fully explain the abnormal underpricing. 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: 2017–07–25
  4. By: Mao, N.; McAleer, M.J.; Bai, S.
    Abstract: This paper examines the impact of psychological needs on luxury consumption. Veblen’s Theory of the Leisure Class (1899) invented the term “conspicuous consumption” to describe luxury goods and services, in which Veblen indicated the purpose of luxury consumption was to display wealth and social status. This paper integrates the following two papers: __(1)__ Han and Zhou (2002), who proposed an integrative model, and argued that three variables, namely Country-of-Origin, Brand Name, and Price, were major predictors for overall product evaluation and purchase intentions; and __(2)__ Han, Nunes and Dreze (2010), who proposed a taxonomy called The Luxury 4Ps, to explain the inductive and deductive psychological needs of luxury consumption.
    Keywords: Psychological needs, Luxury consumption, Consumer behavior
    JEL: N35 Z12 Z13
    Date: 2017–07–01
  5. By: Swati Singh; Manoj Joshi
    Abstract: This research paper focuses on how innovations support new market creation emerging from latent opportunities for low-income group. It also emphasizes on novel strategies that can be implemented for sustaining. The paper concludes with a discussion on the implications of the study and directions to stimulate future research on the subject.
    Date: 2017–07

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