nep-mkt New Economics Papers
on Marketing
Issue of 2018‒03‒12
seven papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Do consumers choose to stay ignorant? The role of information in the purchase of ethically certified products By Felgendreher, Simon
  2. Nonstandard Work Schedules and Father Involvement Among Nonresident and Resident Fathers By Alejandra Ros Pilarz; Laura Cuesta; Yonah Drazen
  3. Disagreement in consumer inflation expectations By Tomasz Łyziak; Xuguang Sheng
  4. Firms' Expectations of New Orders, Employment, Costs and Prices: Evidence from Micro Data By Boneva, Lena; Cloyne, James; Weale, Martin; Wieladek, Tomasz
  5. Public Communication and Collusion in the Airline Industry By Aryal, Gaurab; Ciliberto, Federico; Leyden, Benjamin
  6. Major Government Customers and Loan Contract Terms By Cohen, Daniel A.; Li, Bin; Li, Ningzhong; Lou, Yun
  7. Gains from Multinational Competition for Cross-Border Firm Acquisition By Onur A. Koska

  1. By: Felgendreher, Simon (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The paper analyzes how consumers access information about ethical certificates and how access to this information influences consumers’ purchasing decisions. Using an experimental market game and letting consumers choose between a certified and an uncertified product, this study finds that consumers do not ignore information about the effectiveness of ethical certificates in a systematic manner. Also, as long as the access to information is costless, varying the way it is provided to consumers does not influence the purchasing decision between a certified and an uncertified product. However, consumers are extremely price sensitive: once a small cost for information is introduced, most consumers are not willing to access it, and the share of consumers buying the certified product decreases significantly.
    Keywords: information; strategic ignorance; experiment; market; ethical consumption; Fair Trade; Fairtrade; ethical labels
    JEL: C91 D12 D64 D89
    Date: 2018–01
  2. By: Alejandra Ros Pilarz (University of Wisconsin−Madison); Laura Cuesta (Rutgers University); Yonah Drazen (University of Wisconsin−Madison)
    Abstract: Due to large increases in rates of marital dissolution and nonmarital births in recent decades, many children today grow up living away from their biological father. Prior research finds that employed nonresident fathers and those with higher earnings tend to be more highly involved with their children. Yet, the timing of work may also influence their involvement. This study tests the hypothesis that fathers’ nonstandard work schedules are related to three dimensions of involvement — father’s accessibility to, engagement with, and responsibility for his child — and examine differences in these relationships between nonresident and resident fathers. Using data from the Fragile Families and Child Wellbeing Study and OLS regression models with rich controls, we find that among nonresident fathers, working an evening shift or a weekend shift were each associated with lower levels of involvement with their three-year-old children. For resident fathers only, we found no associations between work schedules and involvement.
    JEL: J12 J22
    Date: 2017
  3. By: Tomasz Łyziak (Narodowy Bank Polski); Xuguang Sheng (American University)
    Abstract: We posit that consumers form expectations about inflation by combining two sources of information: their beliefs from shopping experience and news about inflation they learn from experts. Disagreement among consumers in our model comes from four sources: (i) consumers’ divergent prior beliefs, (ii) heterogeneity in their propensities to learn from experts, (iii) experts’ different views about future inflation, and (iv) difference in mean expectations between consumers and experts. By carefully matching the datasets from the Michigan Survey of Consumers with the Survey of Professional Forecasters, we find that inflation expectations between households and experts differ substantially and persistently from each other, and households pay close attention to salient price changes, while experts respond more to monetary policy and macro indicators. Our empirical estimates imply economically significant degrees of information rigidity and these estimates vary substantially across households. This significant heterogeneity poses a great challenge for the canonical sticky-information model that assumes a single rate of information acquisition and for noisy-information model in which all agents place the same weight on new information received.
    Keywords: Consumers, Disagreement, Inflation Expectation, Noisy Information, Sticky Information
    JEL: E32 E52
    Date: 2018
  4. By: Boneva, Lena; Cloyne, James; Weale, Martin; Wieladek, Tomasz
    Abstract: Firms' expectations play a central role in forward-looking macroeconomic models, but little is known empirically about how these are formed or whether they matter. Using a novel panel data set of firms' expectations about new orders, employment, unit costs, prices and wage rates for the United Kingdom, we document a range of stylized facts about the properties of firms' expectations and their relationship with recent pricing decisions. Expected future price and wage growth are influenced by firm-specific and aggregate factors. Price expectations are more correlated with cost and inflation indicators, wage expectations are more correlated with activity indicators. Expectations of new orders are influenced by aggregate conditions, while expected employment and unit costs seem to be influenced more by firm-specific factors. We also provide micro evidence to support the idea that actual price movements are influenced by expected future price movements, although firms' expectations do not seem to be fully rational.
    Keywords: Firm expectations; pricing setting; rationality; survey data; inflation expectations
    JEL: C23 C26 E31
    Date: 2018–02
  5. By: Aryal, Gaurab; Ciliberto, Federico; Leyden, Benjamin
    Abstract: We investigate whether the top management of all legacy U.S. airlines used their quarterly earnings calls as a mode of communication with other airlines to coordinate output reduction (fewer passenger seats) on competitive routes. We build an original and novel dataset on the public communication content from the earnings calls, and use Natural Language Processing techniques from computational linguistics to parse and code the text from earnings calls by airline executives to measure communication. Then we determine if mentioning terms associated with ``capacity discipline'' is a way to sustain collusion on capacity. The estimates show that when all legacy carriers in a market communicate ``capacity discipline,'' it leads to a substantial reduction in the number of seats offered in the market. We find that the effect is driven entirely by legacy carriers, and also that the reduction is larger in smaller markets. Finally, we leverage our high-dimensional text data to develop novel approaches to implement falsification tests and check conditional exogeneity, and confirm that our finding ---legacy airlines use public communication regarding capacity discipline to collude ---is not spurious.
    Keywords: Airlines; Capacity Discipline; Collusion; communication; Text Data
    JEL: D22 L12 L41 L68
    Date: 2018–02
  6. By: Cohen, Daniel A. (University of Texas at Dallas - Naveen Jindal School of Management); Li, Bin (University of Texas at Dallas - Naveen Jindal School of Management); Li, Ningzhong (University of Texas at Dallas); Lou, Yun (Singapore Management University)
    Abstract: This study examines how a firm’s business relationship with the U.S. government, in particular, sales to the government, impacts its loan contract terms and how the effect is different from that of major corporate customers. We find that firms with major government customers have a lower number of covenants and are less likely to have performance pricing provisions in their loan contracts than other firms, whereas major corporate customers do not have such impacts. We do not find evidence that major government customers affect the supplier firm’s loan spread, security, or maturity. We conjecture that lenders benefit from the strict monitoring activities of the government customer and reduce the use of covenants and performance pricing in loan contracts when the borrowing firm has a government customer.
    Keywords: Government Customers; Loan Contract Terms
    JEL: G32 G38
    Date: 2016–11–13
  7. By: Onur A. Koska (Department of Economics, Middle East Technical University, Ankara, Turkey)
    Abstract: This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would have gained more had they been able to credibly commit to a cooperative equilibrium of independent foreign sales, either via greenfield investment or trade under complete liberalization) which increases local welfare by more than both the case without foreign market entry and the case with foreign market entry via independent foreign sales.
    Keywords: Cross-Border Firm Acquisitions; Foreign Market Entry Regulations; Greenfield Investment; Trade; Consumer Welfare
    JEL: F23
    Date: 2018–01

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