nep-mkt New Economics Papers
on Marketing
Issue of 2017‒11‒12
five papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Trust in peer platform markets: Consumer survey findings By OECD
  2. Faster payments: market structure and policy considerations By Rosenbaum, Aaron; Baughman, Garth; Manuszak, Mark D.; Stewart, Kylie; Hayashi, Fumiko; Stavins, Joanna
  3. Negative consumer value and loss leading By Caprice, Stéphane; Shekhar, Shiva
  4. Multiproduct Intermediaries and Optimal Product Range By Rhodes, Andrew; Watanabe, Makoto; Zhou, Jidong
  5. Dark web: the economics of online drugs markets By V. Bhaskar; Robin Linacre; Stephen Machin

  1. By: OECD
    Abstract: Trust is a key component in peer platform markets (PPMs). In 2016, the OECD’s Committee on Consumer Policy (CCP) produced a report on Protecting consumers in peer platform markets: Exploring the issues. The 2016 report examined a number of the mechanisms that peer platforms have themselves developed to help engender trust in and use of their services (e.g. initiatives such as ratings and reviews) and raised a set of questions for further research and reflection. In order to understand better the role and drivers of consumer trust in PPMs, the CCP conducted an online survey of 10 000 consumers across ten OECD member countries. This report discusses the findings of that survey.
    Date: 2017–11–07
  2. By: Rosenbaum, Aaron (Board of Governors of the Federal Reserve System); Baughman, Garth (Board of Governors of the Federal Reserve System); Manuszak, Mark D. (Board of Governors of the Federal Reserve System); Stewart, Kylie (Board of Governors of the Federal Reserve System); Hayashi, Fumiko (Federal Reserve Bank of Kansas City); Stavins, Joanna (Federal Reserve Bank of Boston)
    Abstract: The U.S. payments industry is in the process of developing ubiquitous, safe, faster electronic solutions for making a broad variety of business and personal payments. How this market for faster payments will evolve will be shaped by a range of economic forces, such as economies of scale and scope, network effects, switching costs, and product differentiation. Emerging technologies could alter these forces and lead to new organizational arrangements or market structures that are different from those in legacy payment markets to date. In light of this uncertainty, this paper examines three hypothetical market structures that may emerge: a dominant operator environment, a multi-operator environment, and a decentralized environment. Each of these market structures has different implications for the public policy objectives of efficiency, safety, and ubiquity. The paper also considers tools to promote positive outcomes in each market structure.
    Keywords: faster payments; market structure; competition; payment system improvement; public policy; retail payments
    JEL: D4 E42 G2 L1
    Date: 2017–09–21
  3. By: Caprice, Stéphane; Shekhar, Shiva
    Abstract: Large retailers, competing with smaller stores that carry a narrower range, can exercise market power by pricing below cost some of their products. Below-cost pricing arises as an exploitative device rather than a predatory device (e.g., Chen and Rey, 2012). Unlike standard textbook models, we show that positive consumer value is not required in these frameworks. Large retailers can sell products offering consumers a negative value. We use our insight to revisit some classic issues in vertical relations.
    Keywords: multiproduct retailers,loss-leading,negative consumer value
    JEL: L13 L81
    Date: 2017
  4. By: Rhodes, Andrew; Watanabe, Makoto; Zhou, Jidong
    Abstract: This paper develops a framework for studying the optimal product range choice of a multiproduct intermediary when consumers demand multiple products. In the optimal product selection, the intermediary uses exclusively stocked high-value products to increase store traffic, and at the same time earns profit mainly from non-exclusively stocked products which are relatively cheap to buy from upstream suppliers. By doing this the intermediary can earn strictly positive profit, including in situations where it does not improve efficiency in selling products. A linkage between product selection and product demand features such as size and shape is established. It is also shown that relative to the social optimum, the intermediary tends to be too big and stock too many products exclusively.
    Keywords: intermediaries, product range, multiproduct demand, search, exclusive contracts
    JEL: D83 L42 L81
    Date: 2017–10
  5. By: V. Bhaskar; Robin Linacre; Stephen Machin
    Abstract: The online market for buying and selling drugs is resilient and seems to bounce back rapidly after the exit of a large platform like Silk Road. That is one of the findings of research by Stephen Machin and colleagues, who have collected and analysed information on around 1.5 million drugs transactions on the so-called 'dark web' to understand the economic functioning of these markets. The researchers also find that only a small minority of online drugs deals receive bad ratings from buyers; and sellers that do receive bad ratings typically experience significant sales reductions. The study concludes that in the 'war on drugs', law enforcement needs more resources and better means to tackle drug buying and selling in the cyber domain.
    Keywords: dark web, drugs
    Date: 2017–10

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