nep-mkt New Economics Papers
on Marketing
Issue of 2018‒05‒07
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Missed Sales and the Pricing of Ancillary Goods By Gomes, Renato; Tirole, Jean
  2. To pay or not to pay for parking at shopping malls - A rationale from the perspective of two-sided markets By Inga Molenda; Gernot Sieg
  3. Market Entry, Fighting Brands and Tacit Collusion: The Case of the French Mobile Telecommunications Market By Bourreau, Marc; Sun, Yutec; Verboven, Frank
  4. Mortality from Nestlé’s Marketing of Infant Formula in Low and Middle-Income Countries By Jesse K. Anttila-Hughes; Lia C.H. Fernald; Paul J. Gertler; Patrick Krause; Bruce Wydick
  5. The role and impact of Data Centres on developing new Corporate Real Estate Strategies for resilient business By Gheorghe Multescu
  6. Branch-Cut-and-Price for the Scheduling Deliveries with Time Windows in a Direct Shipping Network By Timo Gschwind; Stefan Irnich; Simon Emde; Christian Tilk
  7. Pricing and Diffusion of Durables with Network Externalities By Hattori, Keisuke; Zennyo, Yusuke
  8. Economic success and sustainability in pharmaceutical sector: a case of Indian SMEs By José Niño-Amézquita; Fedor Legotin; Oleg Barbakov
  9. Endogenous interlocking directorates By Maria Rosa, Battaggion; Vittoria, Cerasi;
  10. Rentabilidad de las emociones: Crítica al marketing inmobiliario a partir de la teoría de la producción del espacio By José Francisco Vergara Perucich
  11. The Production of Information in an Online World: Is Copy Right? By Julia Cage; nicolas Hervé; Marie-Luce Viaud
  12. Stringency of Land-Use Regulation: Building Heights in US Cities By Jan K. Brueckner; Ruchi Singh

  1. By: Gomes, Renato; Tirole, Jean
    Abstract: Firms often sell a basic good as well as ancillary ones. Hold-up concerns have led to ancillary good regulations such as transparency and price caps. The hold-up narrative, however, runs counter to evidence in many retail settings where ancillary good prices are set below cost (e.g. free shipping, or limited card surcharging in countries where the "no-surcharge rule" was lifted). We argue that the key to unifying these conflicting narratives is that the seller may absorb partly or fully the ancillary good's cost so as not to miss sales on the basic good. A supplier with market power on the ancillary good market then takes advantage of cost absorption and jacks up its wholesale price. Hold-ups occur only when consumers are initially uninformed or naïve about the drip price and shopping costs are high. The price of the basic good then acts as a signal of the drip price, since a high markup on the basic good makes the firm more wary of missed sales. Regardless of whether consumers are informed, uninformed-but-rational, or naïve, mandating price transparency and banning loss-making on the ancillary good leads to (i) an efficient consumption of the ancillary good, and (ii) a reduction of its wholesale price, generating strict welfare gains.
    Keywords: add-ons; drip pricing; give-aways; hold-ups; missed sales
    JEL: D83 L10 L41
    Date: 2018–03
  2. By: Inga Molenda (Institute of Transport Economics, Muenster); Gernot Sieg (Institute of Transport Economics, Muenster)
    Abstract: A shopping mall is a meeting platform for retailers and their customers, and may therefore subsidize one particular market side. We consider suburban malls as competitive bottlenecks, because shops are mainly opened up by retail chains which operate in many malls, but whose customers visit only one suburban mall, so as to save transport costs. If the consumer-to-shop externality is larger than the shop-to-consumer externality, parking is subsidized. If customers generate high revenue, the mall operator will generally refrain from charging an entry fee, and offer free parking to its visitors. This result is shown in a model with variety-loving consumers and two competing malls at the end point of a Hotelling line on which their potential visitors, and thus the retailers’ customers, are located.
    JEL: L91 R41
    Date: 2017–11
  3. By: Bourreau, Marc; Sun, Yutec; Verboven, Frank
    Abstract: We study a major new entry in the French mobile telecommunications market, followed by the introduction of fighting brands by the three incumbent firms. Using an empirical oligopoly model with differentiated products, we show that the incumbents' launch of the fighting brands can be rationalized only as a breakdown of tacit collusion. In the absence of entry the incumbents successfully colluded on restricting their product variety to avoid cannibalization; the new entry of the low-end competition made such semi-collusion more difficult to sustain because of increased business stealing incentives. Consumers gained considerably from the added variety of the new entrant and the fighting brands, and to a lesser extent from the incumbents' price response to the entry.
    Keywords: Entry; fighting brand; Mobile telecommunications; product variety; semi-collusion
    JEL: L13 L96
    Date: 2018–04
  4. By: Jesse K. Anttila-Hughes; Lia C.H. Fernald; Paul J. Gertler; Patrick Krause; Bruce Wydick
    Abstract: Intensive and controversial marketing of infant formula is believed to be responsible for millions of infant deaths in low and middle-income countries (LMICs), yet to date there have been no rigorous analyses that quantify these effects. To estimate the impact of infant formula on infant mortality, we pair country-specific data from the annual corporate reports of Nestlé, the largest producer of infant formula, with a sample of 2.48 million births in 46 LMICs from 1970-2011. Our key finding is that the availability of formula increased infant mortality by 9.4 per 1000 births, 95%CI [3.6, 15.6] among mothers without access to clean water, suggesting that unclean water acted as a vector for the transmission of water-borne pathogens to infants. We estimate that the availability of formula in LIMCs resulted in approximately 66,000 infant deaths in 1981 at the peak of the infant formula controversy.
    JEL: I14 I15 O15
    Date: 2018–03
  5. By: Gheorghe Multescu
    Abstract: Enhancing our cities adaptive capacity to react to adverse conditions, generated by climate, environmental, resource or community driven vulnerabilities, is part of a global new approach to strengthening our living and working environment. The creation of a resilient business environment plays a key role in the competition between modern day global cities. Various rankings of resilient global cities list technology innovation, digitalization and access to data as crucial factors in achieving a success status. The development of Data Centres (DCs) forms a growing sector as part of new strategies for global business. Safe data storage and management have been identified as a key business strategy components for banking, finance, retail, TNT and global service companies alike. Precise design requirements and challenging location constraints for developing such DCs are better tackled as part of a Corporate Real Estate Strategy (CRES) aligned to each global company’s business needs. At the same time technological advances and the constraints for local property markets generated by the development of DCs in overcrowded urban centres require more research on future implications. What is the role and impact of Data Centres on developing new Corporate Real Estate Strategies in line with resilient business requirements? How can decision-making factors for developing new DCs be included in the management of global companies’ property portfolios? The proposed research is two-fold. First a case study approach will be used to analyse the role and impact of DCs on the alignment of new resilient business strategy requirements with CRES for global companies. Second, future implications of DCs becoming a core component of global companies’ portfolios will be assessed in order to establish requirements for a more resilient CRES approach.
    Keywords: Corporate Real Estate Strategy; Data Centres; Resilience
    JEL: R3
    Date: 2017–07–01
  6. By: Timo Gschwind (Johannes Gutenberg-University); Stefan Irnich (Johannes Gutenberg-University); Simon Emde (Johannes Gutenberg-University); Christian Tilk (Technische Universität Darmstadt)
    Abstract: In a direct shipping (or point-to-point) network, individual deliveries are round trips from one supplier to one customer and back to either the same or another supplier, i.e., a truck can only visit one customer at a time before it has to return to a supplier. We consider the multiple sources, multiple sinks case, where a given set of direct deliveries from a set of suppliers to a set of customers must be scheduled such that the customer time windows are not violated, the truck fleet size is minimal, and the total weighted customer waiting time is as small as possible. Direct shipping policies are, for instance, commonly employed in just-in-time logistics (e.g., in the automotive industry) or in humanitarian logistics. We present an exact branch-cut-and-price algorithm for this problem, which is shown to perform well on instances from the literature and newly generated ones. We also investigate under what circumstances bundling suppliers in so-called supplier parks actually facilitates logistics operations under a direct shipping policy.
    Keywords: direct deliveries, branch-cut-and-price, weighted customer waiting times, just-in-time logistics
    Date: 2018–04–23
  7. By: Hattori, Keisuke; Zennyo, Yusuke
    Abstract: This paper considers the optimal pricing and diffusion of a durable good that exhibits positive network externalities, when consumers are heterogeneous with respect to their expectations about future network sizes. We consider the existence of naive consumers, as well as of sophisticated consumers who have fulfilled expectations about future network sizes. At the time of purchase, naive consumers presume that the current network size will continue over future periods. We find that the firm charges the sequential-diffusion pricing that makes sophisticated consumers function as early adopters, unless consumers quickly become bored with using the goods and/or unless the firm heavily discounts its future profits. In addition, we show that naive consumers may enjoy a greater surplus than do sophisticated consumers, implying that the firm benefits when more consumers are sophisticated. We also compare the profitability of three possible pricing strategies with different commitment powers: fixed, responsive, and pre-announced pricing.
    Keywords: durable good; network externalities; diffusion process; consumer naivete
    JEL: D21 D42 L12 L14
    Date: 2018–04–15
  8. By: José Niño-Amézquita (Regional Center for Productivity and Innovation of Boyaca); Fedor Legotin (Ural State University of Economics); Oleg Barbakov (Tyumen Industrial University)
    Abstract: Our paper examines one of the key aspects of the organizational economics – the factors of economic success and sustainability of the pharmaceutical small and medium enterprises (SMEs) in India. Indian pharmaceutical industry is known for its high fragmentation and weak generic based R&D initiatives. The study uses inflation adjusted cross section data for 20 SMEs in the year 2013-2014 and applies OLS regression model with robust standard errors. It has found that exports, R&D expenditure, and previous year profits have exercised positive impact on SMEs' growth. The negative, yet statistically significant influence of advertising and marketing expenditure highlights the need to rethink about strategic management policies of SMEs. Our results suggest that SMEs are required to pay more attention towards the global market expansion and value creation through R&D investment, as a part of their long-term growth and survival strategy.
    Keywords: R&D,economic success,sustainability,pharmaceutical industry,economic growth
    Date: 2017–09–29
  9. By: Maria Rosa, Battaggion; Vittoria, Cerasi;
    Abstract: The present paper analyzes the choice to place an executive in the board of the rival company, within a duopoly where firms with hidden marginal costs of production compete in the product market. Interlocking directorates may emerge as an equilibrium outcome whenever firms gain by exchanging information about their private costs. We show that a unilateral interlocking arises when firms have different degrees of efficiency and the direction of this interlock is affected by the degree of substitutability in the product market. Bilateral interlocking occurs only between similar firms, that is when equally inefficient firms sell substitute products or when equally efficient firms sell complement products. The equilibrium outcome is always welfare increasing for consumers.
    Keywords: Oligopoly, Firm Organization and Market Structure, Executives
    JEL: L22 M12
    Date: 2018–05–01
  10. By: José Francisco Vergara Perucich (IDEAR)
    Abstract: Las emociones se consideran como vectores detonantes del consumo. El marketing desarrollado por las inmobiliarias ha generado una especificidad de emociones dependiendo del segmento social al cual apuntan sus proyectos. De esta manera, tal y como Santiago es una ciudad espacialmente segregada, el estudio del actual modelo de marketing inmobiliario indica que dicha segregación es conveniente para el capital y asi es que se fomenta la reproducción de ciertos estilos de vida según ubicación en la metrópolis, para facilitar así las ventas. Este artículo expone parte de una investigación que explora la explotación de las emociones asociadas a la vida cotidiana urbana y las estrategias de marketing inmobiliario..
    Keywords: Emociones, Segregación, Marketing, Inmobiliario, Segmentos
    Date: 2017–04
  11. By: Julia Cage (Département d'économie); nicolas Hervé (Institut national de l'audiovisuel); Marie-Luce Viaud (Institut national de l'audiovisuel)
    Abstract: This paper documents the extent of copying and estimates the returns to originality in online news production. We build a unique dataset combining all the online content produced by French news media (newspaper, television, radio, pure online media, and a news agency) during the year 2013 with new micro audience data. We develop a topic detection algorithm that identi_es each news event, we trace the timeline of each story and study news propagation. We unravel new evidence on online news production. First, we show that one quarter of the news stories are reproduced online in less than 4 minutes. Second, we _nd that only 32.6% of the online content is original. Third, we show that reputation e_ects partly counterbalance the negative impact of plagiarism on newsgathering incentives. By using media-level daily audience and article-level social media statistics (Facebook and Twitter shares), we _nd that original content represents between 54 and 62% of online news consumption. Reputation mechanisms actually appear to solve about 30 to 40% of the copyright violation problem.
    Keywords: internet; information spreading; copyright; investigative journalism; social media
    Date: 2018–01
  12. By: Jan K. Brueckner; Ruchi Singh
    Abstract: This paper has explored the stringency of land-use regulation in US cities, focusing on building heights. Substantial stringency is present when regulated heights are far below free-market heights, while stringency is lower when the two values are closer. Using FAR as a height index, theory shows that the elasticity of the land price with respect to FAR is a proper stringency measure. This elasticity is estimated for five US cities by combining CoStar land-sales data with FAR values from local zoning maps, and the results show that New York and Washington, D.C., have stringent height regulations, while Chicago’s and San Francisco’s regulations are less stringent (Boston represents an intermediate case).
    Keywords: building heights, FAR, stringency, regulation
    JEL: R31
    Date: 2018

This nep-mkt issue is ©2018 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.