nep-mkt New Economics Papers
on Marketing
Issue of 2018‒10‒29
five papers chosen by
Marco Novarese
Università del Piemonte Orientale

  1. Discriminating Against Captive Customers By Mark Armstrong; John Vickers
  2. Experiential Learning in a Marketing Travel Study Course By Rita Dynan
  3. Salience and Online Sales: The Role of Brand Image Concerns By Dertwinkel-Kalt, Markus; Köster, Mats
  4. On the competitiveness effects of quality labels: Evidence from the French cheese industry By Sabine Duvaleix-Treguer; Charlotte Emlinger; Carl Gaigné; Karine Latouche
  5. Product Differentiation and Demand Elasticity By Richard L. Carson

  1. By: Mark Armstrong; John Vickers
    Abstract: Mark Armstrong, John Vickers We analyze a market where some consumers only consider buying from a specific seller while other consumers choose the best deal from several sellers. When sellers are able to discriminate against their captive customers, we show that discrimination harms consumers in aggregate relative to the situation with uniform pricing when sellers are approximately symmetric, while the practice tends to benefit consumers in sufficiently asymmetric markets.
    JEL: D8 D43 L13
    Date: 2018–10–11
  2. By: Rita Dynan (La Salle University)
    Abstract: This presentation describes an undergraduate International Marketing travel study course and site visit at La Salle University in Philadelphia, PA, USA. In 2012, a collaboration began with La Salle University and Beaufort 8, an advertising agency in Stuttgart, Germany. We have worked together for seven years and during that time, we have improved the learning experience for the students by making the site visit more comprehensive. Now, two of the site visits for the trip are coordinated: in one day we visit the advertising agency in Stuttgart and we visit one of their client?s marketing offices and their manufacturing facility.In March 2018 we met Beaufort 8?s client Blanco, a luxury sink brand near Stuttgart, Germany. In the morning, students met the client marketing team and visited the nearby factory. The afternoon creative session at the agency was like previous years; the students worked on creating original advertising content for Blanco. This year, the client marketing team attended the student?s presentations of their work at the agency, so the feedback of their ideas came from two perspectives: the creative team at the ad agency and the client.The literature supports experiential learning like this because the site visit creates an authentic experience which is a more effective way to learn (Montrose, 2002). Hands on learning, project-based learning, and engagement in a direct experience also improves learning (Carlson, Wurdinger, 2009)Students love this activity and learn about both the advertising business and international marketing. Experiential learning benefits students studying abroad or doing a travel study course. Presenting students with a real brand problem integrated with a company visit to an international office increases knowledge and comprehension. The assigned projects integrated with the company visit increases learning about impact of culture on marketing decisions. The extension of the site visit to include coordinated visits to an ad agency and their client also allows us to assign a more comprehensive project at the site visit because the longer the site visit, the larger the project. (Duke, 2000)An added benefit to creating a more immersive experience for marketing students like the one described in this presentation is that the immersion into the client?s brand simulates the steps in the creative process: immersion, digestion, incubation, illumination, verification. Students learn about the creative process in their marketing courses and this experience applies the concept to a real brand and a real advertising agency.
    Keywords: Marketing, Advertising, International culture, experiential learning
    JEL: M39
    Date: 2018–07
  3. By: Dertwinkel-Kalt, Markus; Köster, Mats
    Abstract: We provide a novel intuition for the observation that many brand manufacturers have restricted their retailers' ability to resell brand products online. Our approach builds on models of salience according to which price disparities across distribution channels guide a consumer's attention toward prices and lower her appreciation for quality. Thus, absent vertical restraints, one out of two distortions – a quality or a participation distortion – can arise in equilibrium. The quality distortion occurs if the manufacturer provides either an inefficiently low quality under price salience or an inefficiently high quality in order to prevent price salience. The participation distortion arises as offline sales might be entirely abandoned in order to prevent prices from becoming salient. Both distortions are ruled out if vertical restraints are imposed. As opposed to the current EU legislation that considers a range of vertical restraints as being hardcore restrictions of competition, we show that these constraints can be socially desirable if salience effects are taken into account.
    Keywords: Salience,Online Sales,Antitrust,Vertical Restraints,Distribution Channels
    JEL: D21 K21 L42
    Date: 2018
  4. By: Sabine Duvaleix-Treguer; Charlotte Emlinger; Carl Gaigné; Karine Latouche
    Abstract: The paper questions the impact of geographical indication labels on firm export competitiveness in the French cheese and cream industry. We use firm level data from the French custom and an original dataset of firms and products concerned by Protected Designations of Origin (PDO). Our estimations show that PDO labeling allows firms to increase their price by 11.5% on average. Moreover these products are perceived by consumers as products of better quality than non-PDO products. Regarding trade margins, while the effect on trade volume (the intensive margin of trade) is not significant, PDO labeling increases the probability of serving a foreign country (the extensive margin of trade). Our estimations show that exports of PDO products would increase by 11.4% if non-EU consumers value PDO label as much as EU consumers.
    Keywords: Geographical Indication;PDO;Trade Margins;Product Quality;Price
    JEL: F10 F14
    Date: 2018–10
  5. By: Richard L. Carson (Department of Economics, Carleton University)
    Abstract: This paper argues that product differentiation is compatible with perfect competition under free entry and exit and small firm size relative to size of market. Despite Chamberlin’s view, monopolistic competitors are price takers, even though each firm’s product has no perfect substitute. There is a difference between perfect competition with product homogeneity and perfect competition with differentiated products, however. Advertising can pay off with differentiated products because products have separate identities—and price depends on quality—even though firms are price takers for any given quality. A differentiated oligopoly may resemble monopolistic competition a la Chamberlin in some ways.
    Keywords: Monopolistic Competition, Perfect Competition, Product Differentiation
    JEL: D41 D43
    Date: 2018–10–17

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