nep-mkt New Economics Papers
on Marketing
Issue of 2017‒09‒03
eleven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Multiproduct retailing and buyer power: The effects of product delisting on consumer shopping behavior By Jorge Florez-Acosta; Daniel Herrera-Araujo
  2. Consumer Responses to Corporate Social Responsibility (CSR) Contribution Type By Diogo Hildebrand; Yoshiko Demotta; Sankar Sen; Ana Valenzuela
  3. Self-Control and Demand for Preventive Health: Evidence from Hypertension in India By Liang Bai; Benjamin Handel; Edward Miguel; Gautam Rao
  4. Continuous Spatial Monopolistic Competition: Matching Goods With Consumers By Sergey Kokovin; Maxim Goryunov; Takatoshi Tabuchi
  5. Antidepressants for Economists and Business-School Researchers: An Introduction and Review By Katolik, Aleksandra; Oswald, Andrew J.
  6. Logistics Pooling in the French Food Retailing Supply Chains: an Exploratory Study By Hicham Abbad; Sonia Mahjoub
  7. The Silent Treatment: LGBT Discrimination in the Sharing Economy By Rishi Ahuja; Ronan C. Lyons
  8. On the Motivations for the Dual-Use of Electronic and Traditional Cigarettes By David Ronayne; Daniel Sgroi
  9. Maintaing vs. Milking Good Reputation when Customer Feedback is Inaccurate By Behnud Djawadi; Rene Fahr; Claus-Jochen Haake; Sonja Recker
  10. Price competition in pharmaceuticals – evidence from 1303 Swedish markets By Granlund, David; Bergman, Mats A.
  11. Product differentiation and entry timing in a continuous-time spatial competition model with vertical relations By Takeshi Ebina; Noriaki Matsushima

  1. By: Jorge Florez-Acosta (Universidad del Rosario - Universidad del Rosario); Daniel Herrera-Araujo (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: This paper empirically examines the effects of product delisting on consumer shopping behavior in a context of grocery retailing by large multiproduct supermarket chains. A product is said to be delisted when a supermarket stops supplying it while it continuous being sold by competing stores. We develop a model of demand in which consumers can purchase multiple products in the same period. Consumers have heterogeneous shopping patterns: some find it optimal to concentrate purchases at a single store while others prefer sourcing several separate supermarkets. We account for this heterogeneity by introducing shopping costs, which are transaction costs of dealing with suppliers. Using scanner data on grocery purchases by French households in 2005, we estimate the parameters of the model and retrieve the distribution of shopping costs. We find a total shopping cost per store sourced of 1.79 € on average. When we simulate the delisting of a product by one supermarket, we find that customers’probability of sourcing that store decreases while the probability of sourcing competing stores increases. The reduction in demand is considerably larger when consumers have strong preferences for the delisted brand. This suggests that retailers may be hurting themselves, and not only manufacturers, when they delist a product. However, when customers have strong preferences for the store such effects are lower, suggesting that inducing store loyalty in customers appears to have an effect on vertical negotiations and, in particular, it enables powerful retailers to impose vertical restraints on manufacturers.
    Keywords: Grocery retailing, supermarket chains, buyer power, vertical,restraints, product delisting, shopping costs, one-and multistop shopping,Simulated Maximum likelihood
    Date: 2017–05
  2. By: Diogo Hildebrand (MKT - Marketing - Grenoble École de Management (GEM)); Yoshiko Demotta (Fairleigh Dickinson University); Sankar Sen (Baruch College - CUNY - City University of New-York [New-York]); Ana Valenzuela (Baruch College - CUNY - City University of New-York [New-York])
    Abstract: While companies contribute in different ways to the corporate social responsibility (CSR) issues they support, little is known about the effects of varying CSR contribution types on consumers’ evaluations of the contributing company. This paper examines consumer reactions to two basic contribution types – money versus in-kind – in the CSR domain of disaster relief to demonstrate, through five studies, that while consumers evaluate a company more favorably when it makes in-kind rather than monetary contributions of equivalent value to CSR issues that are perceived to be less controllable, the pattern reverses when the company’s contributions are made to CSR issues that are perceived to be more controllable. This interaction between contribution type and perceived issue controllability is more likely to manifest when controllability is accessible in the minds of consumers. The underlying process is driven by the extent to which the disparate emotionality of each contribution type matches the intensity of felt emotion evoked by CSR issues of varying perceived controllability, producing processing fluency.
    Keywords: fluency, controllability, emotion,corporate social responsibility, contribution type
    Date: 2017
  3. By: Liang Bai; Benjamin Handel; Edward Miguel; Gautam Rao
    Abstract: Self-control problems constitute a potential explanation for the under-investment in preventive health care observed in low-income countries. A commonly proposed policy tool to solve such problems is offering consumers commitment devices. We conduct a field experiment to evaluate the effectiveness of different types of theoretically-motivated commitment contracts in increasing preventive doctor visits by hypertensive patients in rural India. We document varying levels of takeup of the different commitment contracts, but find no effects on actual doctor visits or individual health outcomes. Thus, a substantial number of individuals pay for commitments, but then fail to follow through on the specified task, losing money without experiencing any health benefit. We develop and structurally estimate a pre-specified model of consumer behavior under present bias with varying levels of naivete. The results are consistent with a large share of individuals being partially naive about their own self-control problems: in other words, they are sophisticated enough to demand some commitment, but overly optimistic about whether a given commitment is sufficiently strong to be effective. The results suggest that commitment devices may in practice be welfare diminishing, at least in some contexts, and serve as a cautionary tale about the role of these contracts in the health care sector.
    JEL: D91 I12
    Date: 2017–08
  4. By: Sergey Kokovin (National Research University Higher School of Economics); Maxim Goryunov (National Research University Higher School of Economics); Takatoshi Tabuchi (University of Tokyo - Faculty of Economics)
    Abstract: Our new approach enriches the general additive monopolistic competition model (AMCM) - with a space of product characteristics: consumers' "ideal varieties". Unlike Hotelling, such partially localized competition involves intersecting zones of service among (continuously distributed) producers. Then, the uniform equilibrium firms' density increases with growing population, as with the usual AMCM. However, now increasing/decreasing prices are determined by the increasing/decreasing elasticity of elementary utility (instead of demand elasticity in AMCM). A new characteristic - the firm's range of service - decreases. Such finer matching between buyers and sellers becomes a new source of welfare gain from a thicker market, unlike the variety benefit in AMCM. The free-entry competition remains socially excessive under some natural preferences.
    Keywords: monopolistic competition, spatial competition, optimal product diversity, gains from trade, finer matching.
    JEL: L11 L13
    Date: 2017
  5. By: Katolik, Aleksandra (University of Warwick); Oswald, Andrew J. (University of Warwick)
    Abstract: The antidepressant pill is an important modern commodity. Its growing role in the world has been largely ignored by researchers in economics departments and business schools. Scholars may be unaware how many citizens and employees now take these pills. Here we review some of the social-science literature on the topic. We discuss research on the impact of advertising upon antidepressant consumption, the link between antidepressants and the human 'midlife crisis', and evidence on how antidepressants are connected to crime, suicide, and financial hardship. We argue that antidepressants will eventually have to be modelled as a new form of consumption that lies in the currently grey area between medicines and consumer goods. This topic demands scholarly and societal attention.
    Keywords: medications, depression, well-being, happiness
    JEL: I1 I12 I3 I31
    Date: 2017–08
  6. By: Hicham Abbad (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes); Sonia Mahjoub (LARGECIA - ONIRIS - Ecole Nationale Vétérinaire, Agroalimentaire et de l'alimentation Nantes-Atlantique)
    Abstract: Faced with the increased performance requirements of large food retailers, suppliers are continually seeking solutions to improve their logistical performance. To achieve this, for the last few years manufacturers have turned to pooling. This practice requires the mutualization of logistical means (warehouses, distribution centers, transport tools, information systems) and to have the managed by another company, logistics service providers. Despite the interest of numerous companies in pooling, horizontal mutualization experiences between suppliers and large food retailers, remain limited. The main objective of this paper is to identify the obstacles slowing down recourse to horizontal mutualization solutions. Documentary research in specialized professional reviews backed up with interviews with three experts has enabled us to identify and analyze the reasons stopping suppliers to adopt this collaborative approach in greater numbers.
    Keywords: retailers,logistics service providers,France,logistics pooling,suppliers
    Date: 2017–06–28
  7. By: Rishi Ahuja (Department of Economics, Trinity College Dublin); Ronan C. Lyons (Department of Economics, Trinity College Dublin)
    Abstract: Online marketplaces were built with the implicit promise of reducing discrimination. Over time, though, online marketplaces have increasingly been designed to reduce anonymity as an exercise in trust building. While the reduction of anonymity can build trust, such design choices can also facilitate discrimination. This study is the first to examine whether there is discrimination against those in same-sex relationships (SSRs) in the sharing economy. Specifically, we examine whether SSRs face discrimination on the Airbnb platform in Dublin, Ireland, through a field experiment. We find that guests in implied male SSRs are approximately 20-30 percent less likely to be accepted than identical guests in implied opposite-sex relationships (OSRs) and in female SSRs. This difference is driven by non-responses from hosts, not outright rejection, and persists regardless of a variety of host and location characteristics, although male hosts and those with many listings are less likely to discriminate. Discrimination against male SSRs was observed least in the most desirable locations. The findings are not consistent with taste-based discrimination but, with little evidence for statistical discrimination, they raise something of a puzzle about the underlying source of discrimination against those in SSRs.
    Keywords: discrimination; sharing economy; field experiment; Airbnb
    JEL: J16 R3
    Date: 2017–08
  8. By: David Ronayne; Daniel Sgroi
    Abstract: Abstract We apply a classical economic categorization of preferences to identify the motivations of dual-users of electronic and traditional cigarettes. The responses of 2,406 U.S. adults (including 413 dual-users) in 2015 were collected using a novel online survey along with a follow-up in 2016 of 143 of these adults (68 dual-users). A sizeable minority of 37% of dual-users reported viewing electronic and conventional cigarettes primarily as complements. Of those who had never smoked or used electronic cigarettes, only 27% thought the complementarity motive would be primary. Dual-user motivations were associated with quit-attempt, cessation methods, gender and age. One year on, there was a positive relationship between the level of complementarity in the dual-user’s motives and their change in self-reported cigarette consumption. It is concluded that the application of a canonical economic classification of preferences may reveal important heterogeneities among the dual-user population.
    Keywords: smoking; complements; substitutes; dual-use; preferences
    JEL: I12 I18 D12
    Date: 2017–08–21
  9. By: Behnud Djawadi (Paderborn University); Rene Fahr (Paderborn University); Claus-Jochen Haake (Paderborn University); Sonja Recker (Paderborn University)
    Abstract: In Internet transactions, customers and service providers often interact once and anonymously. To prevent deceptive behavior a reputation system is particularly important to reduce information asymmetries about the quality of the o?ered product or service. In this study we examine the e?ectiveness of a reputation system to reduce information asymmetries when customers may make mistakes in judging the provided service quality. In our model, a service provider makes strategic quality choices and short-lived customers are asked to evaluate the observed quality by providing ratings to a reputation system. The customer is not able to always evaluate the service quality correctly and possibly submits an erroneous rating according to a prede?ned probability. Considering reputation pro?les of the last three sales, within the theoretical model we derive that the service provider’s dichotomous quality decisions are independent of the reputation pro?le and depend only on the probabilities of receiving positive and negative ratings when providing low or high quality. Thus, a service provider optimally either maintains a good reputation or completely refrains from any reputation building process. However, when mapping our theoretical model to an experimental design we ?nd that a signi?cant share of subjects in the role of the service provider deviates from optimal behavior and chooses actions which are conditional on the current reputation pro?le. With respect to these individual quality choices we see that subjects use milking strategies which means that they exploit a good reputation. In particular, if the sales price is high, low quality is delivered until the price drops below a certain threshold, and then high quality is chosen until the price increases again.
    Keywords: Service Quality, Reputation Systems, Online Markets, Experimental Economics, Markovian Decision Process
    JEL: C73 C91 L12 L15 L86
    Date: 2017–08
  10. By: Granlund, David (Department of Economics, Umeå University); Bergman, Mats A. (Södertörn University)
    Abstract: We study the short- and long-term price effects of number of competing firms using panel-data on 1303 distinct pharmaceutical markets for 78 months. This is done using actual transaction prices in an institutional setting with little room for non-price competition and where simultaneity problem can be addressed effectively. In the long-term, the price of generics is found to decrease by 81% when the number of firms selling generics is increased from 1 to 10. Half of this reduction takes place immediately and 70% within three months. Also, prices of originals are found to react to competition, but far less and much slower; going from 1 to 10 firms reduces their price by 29% in the long term but by only 2% in the short term.
    Keywords: Price competition; dynamic; adjustment; pharmaceutical industry; generic drugs; brand-name drugs
    JEL: D40 I13 L13 L65
    Date: 2017–08–28
  11. By: Takeshi Ebina; Noriaki Matsushima
    Abstract: We study the entry timing and location decisions of two exclusive buyer-supplier relationships in a continuous-time spatial competition model. In each relationship, the firms determine their entry timing and location, and negotiate a wholesale price through Nash bargaining. Then, the downstream firm immediately determines its retail price. Our findings are as follows. Ordinarily, if the supplier of the first entrant (called the leader pair) has strong bargaining power, the equilibrium location of the leader will be closer to the center, inducing a delay in entry by the second entrant (called the follower pair). This delay implies the stronger bargaining power of the supplier in the leader pair can also benefit the buyer of the pair. The location of the leader pair can change non-monotonically with an increase in the supplier's bargaining power, which has a substantial impact on the entry timing of the follower pair. However, the greater the bargaining power of the supplier in the follower pair, the closer the leader pair will be to the edge. This implies that having greater bargaining power will enhance the profitability of the supplier in the follower pair.
    Date: 2017–08

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