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on Marketing |
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Issue of 2009‒08‒22
seven papers chosen by Joao Carlos Correia Leitao Technical University of Lisbon |
| By: | Sha Luo |
| Abstract: | Along the standard measures of price dispersion, this paper proposes a new method, the residual variance model, to examine the levels of price and price variation within and across 10 kinds of physically identical products on eBay UK. The results find that the price levels and price dispersions on eBay are lower than the ones reported in the prior literature regarding other online markets, but the ’law of one price’ has not prevailed in any sample category. It further suggests an important interaction between the extent of price dispersion and the heterogeneities of consumers and sellers. |
| Keywords: | Price Dispersion, Online Auction Markets. |
| JEL: | D44 D49 |
| Date: | 2009–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2009_07&r=mkt |
| By: | Granlund, David (Department of Economics, Umeå University) |
| Abstract: | The price effects of the Swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in Sweden in 1997—2007. The price reduction due to the reform was estimated to average 10% and was found to be significantly larger for brand name pharmaceuticals than for generics. The results also imply that the reform amplified the effect of generic entry has on brand-name prices by a factor of ten. Results of a demand-estimation imply that the price reductions increased total pharmaceutical consumption by 8% and consumer welfare by SEK 2.7 billion annually. |
| Keywords: | drugs; generic competition; equivalent variation; demand estimation |
| JEL: | D40 I11 L65 |
| Date: | 2009–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0777&r=mkt |
| By: | Alberto A. Gaggero (University of Valle d'Aosta, Italy.); Claudio A. Piga (Dept of Economics, Loughborough University) |
| Abstract: | This paper analyzes the empirical relationship between market structure and price dispersion in the airline markets connecting the UK and the Republic of Ireland. Price dispersion is measured by a number of inequality indexes, calculated using fares posted on the Internet at specific days before takeoff. We find a negative correlation between market dominance and price dispersion; thus competition appears to hinder the airlines' ability to price discriminate to exploit consumers' heterogeneity in booking time preferences. Moreover, in the Christmas and Easter periods of high demand, fares are less dispersed, possibly because airlines target a less heterogenous set of consumers. |
| Keywords: | Intertemporal pricing, competition, price dispersion. |
| JEL: | D43 L10 L93 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2009_10&r=mkt |
| By: | Walter Beckert (Institute for Fiscal Studies and Birkbeck College London) |
| Abstract: | <p><p>This paper provides a comprehensive econometric framework for the empirical analysis of buyer power. It encompasses the two main features of pricing schemes in business-to-business relationships: nonlinear price schedules and bargaining over rents. Disentangling them is critical to the empirical identification of buyer power. Testable predictions from the theoretical analysis are delineated, and a pragmatic empirical methodology is presented. It is readily implementable on the basis of transaction data, routinely collected by antitrust authorities. The empirical framework is illustrated using data from the UK brick industry. The paper emphasizes the importance of controlling for endogeneity of volumes and for heterogeneity across buyers and sellers.</p></p> |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:17/09&r=mkt |
| By: | Daniel Houser (George Mason University); Sandra Ludwig (LMU Munich); Thomas Stratmann (George Mason University) |
| Abstract: | We examine the effect of deceptive advertising on voting decisions in elections. We model two-candidate elections in which 1) voters are uncertain about candidates' attributes; and 2) candidates can inform voters of their attributes by sending advertisements. We compare political campaigns with truthful advertising to campaigns in which there is a small chance of deceptive advertising. Our theoretical model predicts that informed voters should act on the information contained in the advertisement. Thus, even in deceptive campaigns, informed voters should either vote for the candidate from whom they received an advertisement or abstain from voting; they should never vote for the opposing candidate. We test our model in laboratory elections, and, as predicted, find higher participation among informed voters in elections that allow only for truthful advertisement than in elections that permit deceptive advertising. Contrary to our theoretical predictions, we find substantial differences in voting behavior between truthful and deceptive campaigns. When faced with a small probability of deception, informed voters in deceptive campaigns vote for the candidate who did not send an advertisement, thereby making sub-optimal voting choices. Even when there is only a small chance that an advertisement is deceptive, voters are more likely to elect the candidate who generates less welfare. |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:gms:wpaper:1011&r=mkt |
| By: | Takahashi, Taiki; Hadzibeganovic, Tarik; Cannas, Sergio; Makino, Takaki; Fukui, Hiroki; Kitayama, Shinobu |
| Abstract: | According to theories of cultural neuroscience, Westerners and Easterners may have distinct styles of cognition (e.g., different allocation of attention). Previous research has shown that Westerners and Easterners tend to utilize analytical and holistic cognitive styles, respectively. On the other hand, little is known regarding the cultural differences in neuroeconomic behavior. For instance, economic decisions may be affected by cultural differences in neurocomputational processing underlying attention; however, this area of neuroeconomics has been largely understudied. In the present paper, we attempt to bridge this gap by considering the links between the theory of cultural neuroscience and neuroeconomic theory of the role of attention in intertemporal choice. We predict that (i) Westerners are more impulsive and inconsistent in intertemporal choice in comparison to Easterners, and (ii) Westerners more steeply discount delayed monetary losses than Easterners. We examine these predictions by utilizing a novel temporal discounting model based on Tsallis' statistics (i.e. a q-exponential model). Our preliminary analysis of temporal discounting of gains and losses by Americans and Japanese confirmed the predictions from the cultural neuroeconomic theory. Future study directions, employing computational modeling via neural networks, are briefly outlined and discussed. |
| Keywords: | Cultural neuroscience; neuroeconomics; intertemporal choice; attention allocation; Tsallis’ statistics; neural networks |
| JEL: | C63 C02 Z19 C49 C91 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16814&r=mkt |
| By: | Richard Blundell (Institute for Fiscal Studies and University College London); Joel Horowitz (Institute for Fiscal Studies and Northwestern University); Matthias Parey (Institute for Fiscal Studies) |
| Abstract: | <p>This paper develops a new method for estimating the demand function for gasoline and the deadweight loss due to an increase in the gasoline tax. The method is also applicable to other goods. The method uses shape restrictions derived from economic theory to improve the precision of a nonparametric estimate of the demand function. Using data from the U.S. National Household Travel Survey, we show that the restrictions are consistent with the data on gasoline demand and remove the anomalous behavior of a standard nonparametric estimator. Our approach provides new insights about the price responsiveness of gasoline demand and the way responses vary across the income distribution. We reject constant elasticity models and find that price responses vary non-monotonically with income. In particular, we find that low- and high-income consumers are less responsive to changes in gasoline prices than are middle-income consumers.</p> |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:cemmap:11/09&r=mkt |