nonlinear pricing to produce information we investigate the firm s dynamic nonlinear pricing problem when facing consumers whose tastes vary according to a scalar index we relax the standard assumption that the firm knows the distribution of this index in general the firm should determine its marginal price schedule as if it were myopic and produce information by lowering the price schedule bunching consumers at positive purchase levels should be avoided as a special case we also consider a market characterized by homogeneous consumers with a static but unknown demand curve we show that when there are repeat purchases the forward looking firm should tend towards penetration pricing otherwise its strategy should tend towards skimming we extend our insights to more general settings and discuss implications for pricing product lines

product and price competition in a duopoly this paper examines the role of consumer preferences costs and price competition in determining the competitive product strategy of a firm in the model studied here there are two identical firms competing on product quality and price they face consumers who prefer a higher quality product to a lower quality product but differ in how much they are willing to pay for quality the consumers can also choose a substitute if they don t like the product price offerings of the two firms for the firms a higher quality product costs more to produce than a lower quality product the paper shows that the equilibrium strategy for each firm should be to differentiate its product from its competitor with the firm choosing the higher quality choosing the higher margin as well this differentiation however is not efficient that is it is possible to choose two other products and offer them at prices that cover their marginal cost and still satisfy consumers needs better in the aggregate a monopolist by contrast would differentiate his product line efficiently this suggests that cannibalization has different effects on product strategy than competition the paper also shows that if one firm enters the market first then it can defend itself from later entrants and gain a first mover advantage by preempting the most desirable product position

estimating a model of strategic network choice the convenience store industry in okinawa this paper investigates a determinant of location choice for multistore retailing firms the trade off between the business stealing effect and the cost saving effect from clustering their own stores i present an empirical model of network choice by two multistore firms i use lattice theoretical results to address the computational burden of solving for an equilibrium in store networks the framework integrates the static entry game of complete information with post entry outcome data while using simulations to correct for the selection of entrants i present an application of the model to the case of the convenience store industry in okinawa island japan using unique cross sectional data on store networks and revenues i use parameter estimates to examine the impact of a hypothetical horizontal merger on store configurations costs and profits results suggest a retailer s trade off between cost savings and lost revenues from clustering its stores is positive across markets and negative within a market i find an acquirer of a hypothetical merger of two multistore firms would decrease its number of stores in suburbs but increase its number in the city center

quality choice of multiproduct monopolist and spill over effect abstract this paper considers the cost relatedness between qualities that are generally taken as being mutually independent in the standard self selection models unlike the standard results the quality distortion occurs in all qualities offered to both types of consumers and interestingly the direction of that distortion is determined by the rate of the marginal cost down from the spill over effect even a pooling menu may occur

a model of product line design and introduction sequence with reservation utility abstract cannibalization is a major concern for a firm when designing a product line in addition external options from outside the firm s product line may also play a significant role in this paper we investigate the impact of external options represented by reservation utility on product line design and introduction sequence we find that a heterogeneous reservation utility defines the relative attractiveness of segments and corresponding product line b reservation utility makes it more favorable to introduce products sequentially rather than simultaneously c aggregating segments is an effective way to mitigate cannibalization when it becomes too difficult to manage with different values of reservation utility across multiple segments and d introducing products in a non monotone order of quality can improve profit from simultaneous introduction when the value of reservation utility of a middle segment is particularly high

equilibrium demand elasticities across quality segments abstract empirical studies find substantial differences in demand elasticities and associated markups among products of different quality this paper analyzes the theoretical determinants of such variation we present a simple model that allows for horizontal and vertical differentiation and accounts for endogenous entry we find that most economic forces in our model such as consumers price sensitivity the scope for product differentiation and sunk costs of entry are likely to induce lower equilibrium demand elasticities for higher quality products in contrast other economic forces such as marginal cost of production and the distribution across consumers of the willingness to pay for quality may induce the opposite pattern these results provide an organizing framework through which empirical findings may be interpreted and may also help to predict variation in demand elasticities for markets in which empirical estimates of elasticities are unavailable or infeasible to obtain

credible spatial preemption it is often argued that incumbent firms may deter entry by preemptive investment in new goods we show that these conclusions are reversed when multiproduct incumbentfirms may exit in response to entry once entrants are in an industry an incumbent will often want to withdraw some goods to prevent competition with the entrant from reducing profits on other goods such a reaction makes entry more attractive to a potential entrant the equilibrium industry structure is less likely to be monopolistic as the goods are better substitutes as exit costs are low and as the competition between producers of the same good is more intense

designing supply contracts contract type and information asymmetry this paper studies the value to a supplier of obtaining better information about a buyer s cost structure and of being able to offer more general contracts we use the bilateral monopoly setting to analyze six scenarios three increasingly general contracts wholesale pricing schemes two part linear schemes and twopart nonlinear schemes each under full and incomplete information about the buyer s cost structure we allow both sides to refuse to trade by explicitly including reservation profit levels for both for the supplier this is implemented through a cutoff policy we derive the supplier s optimal contracts and profits for all six scenarios and examine the value of information and of more general contracts our key findings are as follows first the value of information is higher under two part contracts second the value of offering two part contracts is higher under full information and third the proportion of buyers the supplier will choose to exclude can be substantial

the name your own price channel in the travel industry an analytical exploration name your own price nyop retailers such as priceline offer an alternative distribution channel for service providers in the travel industry such as airlines hotels and car rental companies our research employs an analytical model to identify and understand key trade offs driving the decision by a service provider to employ an nyop channel assuming that such a channel is available this decision requires the existence of forces that counteract the adverse consequences of cannibalization of sales through traditional posted price channels our analysis provides some insight into these forces contracting with the nyop retailer facilitates market segmentation and price discrimination and allows for disposal of excess capacity after meeting business travel demand however the cost of this flexibility is that the service provider can no longer credibly precommit to maintaining high prices when there is unsold capacity also when contracting with an independent retailer the service provider is unable to extract the entire revenue generated from nyop consumers a key insight from our model is that the rationale for contracting with an nyop retailer is driven by the uncertainty in business travel demand not the expectation of excess capacity indeed all else equal the larger the capacity the less likely it is that contracting with an nyop retailer is the right decision on the part of the service provider

design for the environment a quality based model for green product development green product development which addresses environmental issues through product design and innovation as opposed to the traditional end of pipe control approach is receiving significant attention from customers industries and governments around the world in this paper we develop a quality based model for analyzing the strategic and policy issues concerning the development of products with conflicting traditional and environmental attributes on the demand side of the problem we use the framework of conjoint analysis to structure the preferences of the ordinary and green customers on the supply side we apply the theories in optimal product design and market segmentation to analyze the producer s strategic decisions regarding the number of products introduced and their prices and qualities on the policy side we evaluate the effects of environmental standards on the economic and environmental consequences of green product development by jointly considering the interactions among the customers preferences the producer s product strategies and the environmental standards imposed by governments we present some interesting findings that can be used to manage and regulate the development of green products two major findings show that green product development and stricter environmental standards might not necessarily benefit the environment

dual distribution channels the competition between rental agencies and dealers managerial decisions involving marketing channels are among the most critical that an organization must make part of the reason for this importance is that relationships between manufacturers and their intermediaries usually involve long term commitments that are difficult to change on the other hand in order to respond to the realities of the market place an organization must be ready to adapt its distribution practices sometimes under considerable uncertainty about the long term consequences such a problem faces the u s automobile industry which has led manufacturers to experiment with various channel structures when manufacturers first changed their distribution policies they were clear about the short term effect on sales but were unsure about its longer term impact on profitability in this article we develop a model to analyze the marketing of durable products through multiple channels our analysis suggests that even though it was not apparent at the time manufacturers were indeed behaving optimally when they changed their policies our model provides insights not only to automobile manufacturers but also to practitioners and academics who are interested in understanding the unique problems associated with marketing durable products through multiple channels we develop a two period model by assuming that a single manufacturer markets a durable product through two retailers a rental agency and a dealer the rental agency focuses mainly on renting the product in a daily rental market while the dealer focuses on selling the product to a different set of customers in the sales market to model the development of channels in the u s automobile industry we analyze three different channel structures the first structure a separate channel reflects the state of the industry through most of the 1980s when rental agencies were franchised solely to rent and dealers solely to sell the cars in response to a decrease in overall sales manufacturers encouraged rental agencies to sell their slightly used rental cars in the consumer market resulting in the second structure an overlapping channel dealers did not like this arrangement however and in the next experiment a buyback channel some manufacturers began buying back used rental cars and selling them through dealers in terms of the consumer side of the model we assume that consumers are heterogeneous and have product valuations that are distributed uniformly between a low and a high value in addition they recognize that as the durable depreciates with use its secondhand market value decreases while both sold and rented goods depreciate with use we assume based on an analysis of market prices that sold goods depreciate at a higher rate than rented goods given these different depreciation rates and consumers underlying utility functions we develop the market demand functions in the dealer s and rental agency s markets then for each of the channel structures we solve the intermediaries and manufacturer s problems the main contribution of this article is that it allows us to evaluate the profitability associated with various channel structures for all the players in our analysis the dealer the rental agency and the manufacturer in terms of the intermediaries we find that the overlapping channel is the most profitable structure for the rental agency on the other hand it is the least profitable for the dealer in terms of manufacturer profitability our model suggests that the separate channel is the least profitable and the overlapping channel is the most profitable it is interesting to note that the distribution structure in existence today is more akin to a buyback channel this strikes us as a compromise channel which alleviates dealer concerns with the overlapping channel and yet does not harm rental agencies as much as a separate channel these are surprising results because conventional wisdom has been that the overlapping channel was competing away profits for all players this suggests to us that automobile manufacturers were indeed on the right track when they began experimenting with the structure of their distribution channels

discounting in integrated assessments of climate change one of the key decisions that economists working on integrated studies of climate change face is the selection of the method of accounting for damages resulting from possible climate change across a long temporal scale and the method for the intertemporal comparison of the costs associated with possible greenhouse gas abatement strategies sensitivity tests show that the method applied and the resulting discount rate has a major impact on the optimal climate strategy the paper is intended to provide a short review of the various techniques that have been proposed and applied in various integrated models of climate change the underlying problem is as follows we can attempt to be consistent with the economic theory and empirical observations but in this case the derived discount rate will be on the order of 5 to 8 as a result even possibly significant damages from climate change turn out to be negligible when considered at their present value the artificially low discount rate based on ethical reasoning on the other hand makes our climate related decisions and resource allocations inconsistent with the majority of other public policy decisions

estimating markups and market conduct with multidimensional product attributes we demonstrate how to estimate a model of oligopoly pricing when products are multi dimensionally differentiated we provide an empirical counterpart to recent theoretical work on product differentiation using specifications informed by economic theory we estimate price cost margins for products differentiated in many dimensions

pricing market coverage and capacity can green and brown products co exist abstract environmental strains are causing consumers to trade up to greener alternatives and many brown products are losing market coverage to premium priced green rivals in order to tackle this threat many companies currently offering only brown products are contemplating the launch of a green product to complement their product portfolio this paper provides strategic insights into and tactical ramifications of expanding a brown product line with a new green product our analysis explicitly incorporates a segmented consumer market where individual consumers may value the same product differently the economies of scale and the learning effects associated with new green products and capacity constraints for the current production system it is shown that a single pricing scheme for the new green product limits a firm s ability to appropriate the value different customers will relinquish in a segmented market and or to avoid cannibalization a two level pricing structure can diminish and even completely avoid the salience of cannibalization however when resources are scarce a firm can never protect his products from the threat of cannibalization by just revising the pricing structure which can spell the end of his brown product s presence in the market or preclude the firm from launching the green product at this point the degree of cannibalization is higher for the brown product when the green product offers a sufficiently differentiated proposition to green segment consumers

quit behavior under imperfect information searching moving learning the paper provides a search theoretic interpretation of a well known empirical regularity the inverse relationship between quit rates and job tenure we consider a setting where the employed job searcher has incomplete information about non wage job attributes at the time acceptance decisions are made hence jobs will be accepted or refused without full knowledge of the value of the offers the model implies that workers with long tenure will be less likely to quit holding wage rates constant we also show that a risk neutral worker is willing to accept a wage offer that falls below his current full wage in the absence of moving costs

an analysis of the climate change architecture abstract this paper examines the complexity of the current negotiations to avert climate change under the united nations framework convention on climate change drawing on economic game theory modelling it interprets the latest developments within the international negotiations and provides a political economy analysis of the climate change architecture it places the pursuit of international co operation via the kyoto protocol s second commitment period in the context of a country s maintenance of national interest and a flexible emissions abatement strategy accepting that countries will reject an international agreement or obligation that is seen as inimical to their economic competitiveness it incorporates a new game theory model considers how learning from such models can influence agreement design and proposes a new approach from a non monotonic polluting payoff function attention is placed on enabling conditions that entice countries to ratify a climate agreement thereby encouraging participation and accelerating a near term deployment of low carbon technologies

location choice product proliferation and entry deterrence within a slightly modified version of hotelling s model we reconsider the claim that the threat of entry induces existing firms to produce a larger number of products than they would otherwise we show that entry deterrence although optimal need not be achieved through product proliferation in some cases the incumbent monopolist resorts to an entry deterring strategy based on location choice rather than product proliferation we also show that in some cases the number of products chosen by the incumbent facing the threat of entry is strictly greater than the minimum number required to deter entry

probabilistic selling in quality differentiated markets probabilistic selling the sale of synthetic products consisting of a lottery between two distinct goods has been extensively analyzed in horizontal markets in this research we investigate probabilistic selling in quality differentiated markets this is an important new dimension of inquiry because of the widespread prevalence of quality differentiated markets as well as significant differences in the preference structure across these markets in fact this latter consideration casts doubt as to whether probabilistic selling will even emerge in quality differentiated markets we find that probabilistic selling emerges in quality differentiated markets as a way to profitably dispose excess capacity moreover probabilistic selling remains viable even under endogenous quality choice in addition in markets where sellers employ strong quality differentiation the introduction of an intermediate probabilistic good actually causes closer quality levels in a product line and enhances consumer welfare in contrast in markets where sellers employ weak quality differentiation the introduction of an intermediate probabilistic good increases quality separation and degrades consumer welfare overall we view our contribution as one of characterizing the optimality implementation and policy implications of probabilistic selling in quality differentiated markets this paper was accepted by pradeep chintagunta marketing

impact of introducing make to order options in a make to stock environment firms engaged in consumer product sales often implement a strict make to stock approach applying a single price to all customers in such systems customers can get the product at the given price upon availability on the shelf however consumers can often tolerate a delay between order placement and demand satisfaction under a price discount recognizing this phenomenon a supplier may consider offering a menu of delivery price options to consumers where longer delay time options imply lower prices demands from customers willing to wait provide advance demand information to the supplier this paper studies strategies to exploit this additional information to improve profitability and service levels primarily assuming that delivery times are set exogenously we determine optimal prices and stock levels under the new delayed demand satisfaction options in addition we develop analytical models to characterize the system performance gains under the new demand fulfillment option

wages nonwage job characteristics and labor mobility this paper examines the effects of a set of nonwage job characteristics on the quit decisions of young and middle aged men the data set was constructed by merging data in the national longitudinal surveys of young and mature men with data from the dictionary of occupational titles file and the bureau of economic analysis file on fringe benefits the empirical analysis shows that some nonwage job attributes have significant influence on worker quit behavior and that there are important differences in the effects of the nonwage job characteristics across age groups young men are significantly more likely than older men to quit repetitive jobs for example whereas the presence of bad working conditions is a more important factor in the quit decisions of the older cohort the results also indicate that for the older men fringe benefits have a stronger effect on quit decisions than wages do further evidence on age differences is provided through an analysis of panel data from the quality of employment survey since the time of adam smith the theory of equalizing differences that individuals are induced to accept less attractive jobs by receiving compensating increases in their wages has been used by economists to explain the existence of wage differences in the labor market by definition the theory has important implications for understanding the mobility of labor since an individual s decision to change jobs is based on all the characteristics of a job the wage rate fringe benefits and nonpecuniary job at

economic convergence and climate policy abstract this paper addresses the relevance of the economic convergence hypotheses between the developing and the developed world in international greenhouse gas ghg emissions negotiations the results are based on a two region the oecd and the rest of the world row neo classical growth model with exogenous technical progress different technological diffusion patterns and a set of geophysical relationships that consider an environmental externality linked to ghg emissions a game framework is taken into account in the model to capture the strategic interactions between agents the outcome of the negotiations seems indeed to depend on the economic convergence hypotheses faster economic growth of the row countries would encourage them to further mitigate carbon emissions

technological advances transaction costs and consumer welfare consumers incur many transaction costs in purchasing and using most products this paper examines the effects of a reduction in such consumer transaction costs caused by market level technological advances using a model in which consumers are simultaneously heterogeneous in their transaction costs and in their marginal valuations of product quality this paper highlights two mechanisms that can cause such reductions in consumer transaction costs to lower consumer surplus and reduce consumer share of the total social surplus specifically market level technological advances reduce different consumers transaction costs by different amounts and increase their reservation prices by different amounts which can lead to i product design changes that many current consumers do not like and ii homogenization in consumer reservation prices that allows a seller to extract more surplus through its pricing policy this paper also shows that consumers may be better off with seller induced higher consumer transaction costs finally the paper shows how depending on the nature of the quality production process such reductions in consumer transaction costs can either lower or raise product qualities and consumer prices

international co2 emissions control an analysis using ceta abstract this paper explores issues of international cooperation in co2 emission control we consider three cases selfish in which region 1 controls optimally given its own damage costs and region 2 does not control altruistic in which region 1 controls optimally given total worldwide damage costs while region 2 does not control and optimal in which regions 1 and 2 exercise jointly optimal control of emissions and region 1 pays region 2 to participate we find that neither region gains much in the selfish case but both regions are better off in the optimal case than in the altruistic case though region 1 s benefits are negative in both these cases

the implications of costs capacity and competition on product line selection we consider a situation in which a manufacturer has to select the product s to sell as well as the selling price and production quantity of each selected product there are two substitutable products in the consideration set where product 2 has a higher quality and reservation price than that of product 1 by considering the cannibalization effect that depends on the selling price of each product the manufacturer needs to evaluate the profit function associated with three different product line options sell both products or only one of the 2 products in order to examine the impact of costs capacity and competition on the optimal product line selection optimal price and optimal production quantity analytically we present a stylized model in this paper so that we can determine the conditions under which a particular option is optimal

the differentiation triangle the paper formalizes the observation that submarkets for high quality and low quality variants are markedly different from each other we study a simple model where variants of low quality cannot be horizontally differentiated whereas customers disagree about the value of variants in the high quality range we determine the outcome under price competition in the differentiation triangle with sequential entry when each firm can develop the vertical product line or decide to follow a niche strategy i e to develop only one variant

using game theory to model competition the article is an exposition of the basic concepts of noncooperative game theory and their application to advertising product and price competition

full line or specialization strategy the negative effect of product variety on product line strategy abstract this paper studies the product line decisions of firms under two consumer segments differing in their quality sensitivity we focus on a negative impact of the product variety on the consumers motivation to purchase while each product is horizontally differentiated in the presence of this impact and high fixed costs relative to variable costs it is shown that when a highly quality sensitive segment exists it is always advantageous for the monopoly to specialize in only one product serving this segment however the appearance of a competitor can drastically change the product line in the market under the duopolistic setting where two firms sequentially determine their product lines we show that the leader gains a better financial result by offering its product to the low segment for many cases including the case where no product is offered to the high segment by either of the firms who are in equilibrium furthermore we obtain another interesting result that indicates that the follower s profit can exceed the leader s profit when the quality sensitivities between the two consumer segments are sufficiently different even though the two firms are symmetric except for the order of their product offerings

bundling strategies when products are vertically differentiated and capacities are limited we consider a seller who owns two capacity constrained resources and markets two products components corresponding to these resources as well as a bundle comprising the two components in an environment where all customers agree that one of the two components is of higher quality than the other and that the bundle is of the highest quality we derive the seller s optimal bundling strategy we demonstrate that the optimal solution depends on the absolute and relative availabilities of the two resources as well as upon the extent of subadditivity of the quality of the products the possible strategies that can arise as equilibrium behavior include a pure components strategy a partial or full spectrum mixed bundling strategy and a pure bundling strategy where the latter strategy is optimal when capacities are unconstrained these conclusions are contrary to findings in the prior literature on bundling that demonstrated the unambiguous dominance of the full spectrum mixed bundling strategy thus our work expands the frontier of bundling to an environment with vertically differentiated components and limited resources we also explore how the bundling strategies change as we introduce an element of horizontal differentiation wherein different types of customers value the available components differently

optimal and competitive assortments with endogenous pricing under hierarchical consumer choice models this paper studies assortment planning and pricing for a product category with heterogeneous product types from two brands we model consumer choice using the nested multinomial logit framework with two different hierarchical structures a brand primary model in which consumers choose a brand first then a product type in the chosen brand and a type primary model in which consumers choose a product type first then a brand within that product type we consider a centralized regime that finds the optimal solution for the whole category and a decentralized regime that finds a competitive equilibrium between two brands we find that optimal and competitive assortments and prices have quite distinctive properties across different models specifically with the brand primary model both the optimal and the competitive assortments for each brand consist of the most popular product types from the brand with the type primary choice model the optimal and the competitive assortments for each brand may not always consist of the most popular product types of the brand instead the overall assortment in the category consists of a set of most popular product types the price of a product under the centralized regime can be characterized by a sum of a markup that is constant across all products and brands its procurement cost and its marginal operational cost implying a lower price for more popular products the markup may be different for each brand and product type under the decentralized regime implying a higher price for brands with a larger market share these properties of the assortments and prices can be used as effective guidelines for managers to identify and price the best assortments and to rule out nonoptimal assortments our results suggest that to offer the right set of products and prices category and or brand managers should create an assortment planning process that is aligned with the hierarchical choice process consumers commonly follow to make purchasing decisions this paper was accepted by pradeep chintagunta and preyas desai special issue editors this paper was accepted by pradeep chintagunta and preyas desai special issue editors

distribution of potential gains from international environmental agreements the case of the greenhouse effect abstract international negotations between countries will be needed to reach a pareto efficient solution for global environmental problems such as the enhanced greenhouse effect we try to quantify how the potential gains derived from cooperation would be distributed among countries a weighted sum of all countries welfare functions is used as the global welfare function and three different cooperative solutions are considered thefirst best fb thenash bargaining nb and thekalai smorodinsky ks the main result obtained from the simulation of the theoretical model is that although at the world level gains from cooperation are quite similar in all three cooperative solutions distribution of these gains between countries is very different in the fb solution compared to the nb and the ks solutions

a structural dynamic analysis of job turnover and the costs associated with moving to another job this paper provides an empirical analysis of the labor market behavior of employed individuals using a structural on the job search model the costs associated with moving to another job are allowed to be nonzero and may depend on the wage level it is shown that under certain conditions the optimal strategy has the reservation wage property the model is estimated using data on job durations and subjective responses concerning the search strategy the results reveal some strong sources of inflexibility of the labor market copyright 1992 by royal economic society

product and price competition in a two dimensional vertical differentiation model in this paper the one dimensional vertical differentiation model shaked and sutton shaked a j sutton 1982 relaxing price competition through product differentiation rev econom stud 49 3 13 moorthy moorthy k s 1988 product and price competition in a duopoly marketing sci 7spring 141 168 is extended to two dimensions and an analysis of product and price competition is presented a two stage game theoretic analysis in which two firms compete first on product positions and then on price is conducted closed form equilibrium solutions are obtained for each stage in which competitors are unrestricted in their choices of price or product positions a significant finding of this research is that unlike the one dimensional vertical differentiation model firms do not tend towards maximum differentiation although this solution is possible under certain conditions when the range of positioning options on each of the dimensions is equal maxmin product differentiation occurs that is in equilibrium the two firms tend to choose positions which will represent maximum differentiation on one dimension and minimum differentiation on the other dimension

behavior based pricing production efficiency and quality differentiation in a two period vertical duopoly we examine how behavior based price discrimination bpd affects the firms endogenous quality differentiation and profits the firms relative production efficiency defined as the ratio between their unit cost difference and quality difference plays a crucial role with exogenous product qualities bpd always decreases the profits of the more efficient firm but increases those of the sufficiently less efficient firm anticipating its period 2 disadvantage in price discrimination the less efficient firm competes more vigorously and also gains more in period 1 than its competitor for the sufficiently less efficient firm its period 1 gain dominates its period 2 loss and its total profits increase with endogenous quality choices bpd does not alter the low end quality at the lower bound of the quality space but increases the high end quality enlarging quality differentiation this is because under bpd each firm s profit gain decreases or its profit loss increas

turf wars product line strategies in competitive markets in this paper we study product line scope and pricing decisions in a horizontally differentiated duopoly past research has shown that a firm may offer a broader product line to attract higher demand or charge a higher price or both and benefit at the expense of its competitor we show that such outcomes may be reversed especially when consumers have relatively high valuation and low heterogeneity in their preferences for the line extension we find that an equilibrium exists such that only one firm prefers to expand scope but profits may be higher for both firms even in the absence of market size expansion this is because a broader scope permits that firm to effectively price discriminate by raising prices for its core customers the competitor optimally responds by lowering prices to gain share and earn a higher profit thus higher prices for the firm expanding its product line translate into higher demand for the competing firm thus increasing profit for both we show that our results hold when firms deploy generic offensive or defensive strategies during product line expansion

price induced patterns of competition this research focuses on how price changes influence the observed pattern of brand competition the paper begins with a basic utility model formulation and examines the implications of three major classes of preference distributions on the expected patterns of competition a price tier model is proposed to operationalize the theory and to allow predictive testing the price tier model is estimated on 28 brands across four product categories the results show a specific asymmetric pattern of price competition higher price higher quality brands steal share from other brands in the same price quality tier as well as from brands in the tier below however lower price lower quality brands take sales from their own tier and the tier below brands but do not steal significant share from the tiers above the results are consistent with a bimodal preference distribution with the regular price indifference point being located toward the lower quality end of the preference distribution for the categories analyzed

market segmentation self selection and product line design the purpose of this paper is to develop a theory of market segmentation based on consumer self selection the extant theory is based on the third degree price discrimination model of pigou central assumptions of which are that the firm can directly address individual segments and isolate them by using consumer self selection i am relaxing these assumptions in the context of a monopolist designing a product line i show that this relaxation has significant implications for how the products and prices are chosen and what they look like in particular segments may be aggregated even though there are no economies of scale furthermore consumer self selection enables us to model cannibalization and competition among firms

determining the appropriate depth and breadth of a firm s product portfolio abstract some firms have broad product lines others have lean product lines to determine the appropriate number of entries in a specific firm s product line the author develops a model that balances the benefits of increased revenue from a broad product line against production and engineering costs two innovations were central in the development of the model 1 redefining how products are scored on various product attributes so that attribute scores vary normally across the population of products and 2 redefining how the number of entries in a product portfolio is calculated in order to discount the significance of entries that are highly similar to existing products the author also introduces the notion of a centroid time to more easily adjust sales and total development costs for product life cycle and investment life cycle effects these redefinitions enable a firm s profit to be modeled as a simple function of its effective number of product entries the effective number of competitors entrie

legal minimum wages and employment duration 1 introductionthe effect of a legal minimum wage on employee turnover is an important consideration when evaluating the effectiveness of a minimum wage policy if an increase in the minimum wage results in greater turnover then firms hiring costs are increased and the direct benefit to workers who are paid the minimum wage may be lessened a reduction in turnover on the other hand would mean more stability for employers and workers though access to minimum wage jobs may be reduced for job seekers despite the recent proliferation of studies on the effects of legal minimum wages their impact on turnover has received relatively little attention from economists this may be due to the fact that much of the literature focuses on the teen labor market where there is more churning than in the adult labor market gardecki and neumark 1998 the fact remains however that a significant proportion of workers hired at the minimum wage are adults and the effects of the minimum wage onthe turnover hazard are understudied 1standard economic theory suggests that a price floor such as a minimum wage results in fewer transactions and in rents for those suppliers who manage to sell in the context of the labor market this means workers in minimum wage jobs may be expected to receive rents and therefore may be less likely to quit another possible consequence of a minimum wage arises from imperfect information in the labor market combined with heterogeneity among workers and jobs prior to the start of an employment relationship the worker does not know all the relevant aspects of the job and the employer does not know all the important characteristics of the worker as a result in the absence of a mandated minimum wage job applicants may use wage offers to infer information about the nonpecuniary aspects of jobs thereby facilitating the matching process a binding minimum wage compresses the wage distribution so that a single wage is associated with a larger array of jobs this means that the wage offer becomes a poor indicator of a job s nonwage characteristics which leads to a higher proportion of poor matches and consequently more turnover this paper uses data on young men and women in the 1988 1994 rounds of the national longitudinal survey of youth nlsy to estimate the relationship between the minimum wage and the turnover hazard the extent to which the minimum wage binds varies across states both because of differences in state laws and because of differences in wage levels across states we exploit this variation to estimate turnover hazards as a function of the ratio of the nominal minimum wage to the state median wage this variable measures the extent to which the minimum wage binds we find some evidence that in states where the minimum wage is low relative to the state s median wage men hired at the minimum wage have lower employee initiated separation hazards than other low wage workers as the minimum wage rises relative to the prevailing median wage that is as the minimum wage becomes more binding men hired at the minimum wage are increasingly likely to leave their jobs at any given duration when the minimum wage is high relative to the median wage we find that men hired at the minimum wage have significantly higher employee initiated separation hazards than other low wage workers we interpret these findings as evidence that while rents may accrue to minimum wage workers the job matching process is undermined when the minimum wage binds our results apply to the men in our sample but not to the women indeed for women we find no connection between employment duration and the starting wage rate though we do uncover some evidence that for women in low wage jobs employment duration is more elastic with respect to the presence of family friendly fringe benefits than it is for men the paper proceeds as follows the next section explores the possible reasons minimum wages would affect turnover and discusses the existing empirical and theoretical research on this topic

research note on the profitability of firms in a differentiated industry in a model of vertical differentiation the principal concern of this paper is to identify sufficient conditions for producing a higher or lower quality good to be more profitable in terms of profits and profit margin our basic model considers a short run scenario where the firms quality levels are fixed and they engage in price competition here our results are three first we develop the notion of relative cost efficiency and show that its increasing or decreasing monotonicity in product quality implies that of firm profitability in equilibrium a firm s relative cost efficiency refers to its quality adjusted cost dis advantage relative to its immediate competitors for a given distribution of consumer tastes second selling a higher quality good is more profitable when absolute cost efficiency defined as the ratio between a firm s quality and unit cost is increasing in quality third we also establish a set of lower and upper bounds on each firm s profitability the basic model is then extended in two directions we examine unit cost functions that demonstrate monotone profitability even when both quality and price are endogenous variables we also show that the spirit of relative cost efficiency and its associated sufficient condition hold valid for a logconcave consumer distribution

salesforce compensation plans in environments with asymmetric information in this paper we present a theory of salesforce compensation plans to provide insights into why it may be advantageous for a profit maximizing firm to offer members of its salesforce the opportunity to choose from a menu of compensation plans although such contractual arrangements are not commonly used in the industry they have been introduced and implemented by firms such as ibm and st regis paper as in our previous work on salesforce compensation plans basu lal srinivasan and staelin basu a k r lal v srinivasan r staelin 1985 salesforce compensation plans an agency theoretic perspective marketing sci 4 fall 267 291 we use an agency theory framework in this paper we relax the assumptions of information symmetry and salesforce homogeneity and show the conditions under which it is optimal to offer a menu of compensation plans we also show that even when these assumptions are relaxed there are situations where offering a single plan characterized by basu lal srinivasan and staelin basu a k r lal v srinivasan r staelin 1985 salesforce compensation plans an agency theoretic perspective marketing sci 4 fall 267 291 is still optimal insights gained from the analyses are discussed in the context of an existing compensation scheme

heuristics for pricing and positioning a product line using conjoint and cost data designing and pricing a product line is the very essence of every business in recent years quantitative methods to assist managers in this task have been gaining in popularity conjoint analysis is already widely used to measure preferences for different product profiles and build market simulation models in the last few years several papers have been published that suggest how to optimally choose a product line based on such data we formalize this problem as a mathematical program where the objective of the firm is either profit or total welfare unlike alternative published approaches we introduce fixed and variable costs for each product profile the number of products to be introduced is endogenously determined on the basis of their desirability fixed and variable costs and in the case of profits their cannibalization effect on other products while the problem is difficult np complete we show that the maximum welfare problem is equivalent to the uncapacitated plant location problem which can be solved very efficiently using the greedy interchange heuristic based on past published experience with this problem and on simulations we perform we show that optimal or near optimal solutions are obtained in seconds for large problems we develop a new greedy heuristic for the profit problem and its application to simulated problems shows that it too runs quickly and with better performance than various alternatives and previously published heuristics we also show how the methodology can be applied taking existing products of both the firm and the competition into account

relicensing as a secondary market strategy secondary markets in the information technology industry where used or refurbished equipment is traded have been growing steadily for original equipment manufacturers oems in this industry the importance of secondary markets has grown in parallel not only as a source of revenue but also because of their impact on these firms competitive advantage and market strategy recent articles in the press have severely criticized some oems who are perceived to be actively trying to eliminate the secondary market for their products other oems have policies that enhance their secondary markets the goal of this paper is to understand how an oem s incentives and optimal strategies vis a vis the secondary market are shaped contingent on her relative competitive advantage product characteristics and consumer preferences the critical trade off that we examine is whether the indirect benefit from maintaining an active secondary market the resale value effect can outweigh the potentially negative effect of the sales of used products at the expense of new product sales the cannibalization effect to that end we develop a durable good model where the oem can directly affect the resale value of her product through a relicensing fee charged to the buyer of the refurbished equipment we analyze the oem s strategy in both the monopoly and the duopoly cases characterize the optimal relicensing fee set by the oem and draw conclusions on the conditions that favor stimulating or deterring the secondary market this paper was accepted by candace a yano operations and supply chain management

comments on firm specific differentiation and competition among multiproduct firms the main innovation here is the simultaneous consideration of both quality attributes and location attributes katz interprets the former as a product s quality and the latter as brand image reputation of the firm hitherto the product differentiation literature has considered each of these attributes in isolation examples of quality models are mussa and rosen 1978 gabszewicz and thisse 1979 1980 stokey 1980 and moorthy 1982a examples of location models are hotelling 1929 d aspremont gabszewicz and thisse 1979 and novshek 1980 the immediate practical result of considering both product quality and brand image is that even if two firms produce the same quality of product they may each enjoy positive profits in price equilibrium some consumers prefer one brand some the other in particular unless one brand s image dominates the other s that is one firm is more reputable than the other profits for each firm increase as the consumer s brand sensitivity increases another distinguishing feature of this paper is the restriction that each firm produce the same number of product qualities as the number of consumer quality sensitivities t in katz s notation one doesn t expect the number of product qualities to be greater than the number of types but it can be lower in fact we expect it to be lower the reason is not only fixed costs of producing new product varieties but also the self selection constraints in section iila of the paper where katz analyzes the quality choices of a monopolist the first order con

quits and race previous studies estimate that black quit rates are lower than those of whites this paper suggests that these estimates under state black quit propensities because they neglect racial differences in quit responses to commuting time and local unemployment rates ignoring these differences the black quit effect appears to be negative controlling for them the residual race effect is positive and sufficiently large to account for all net black quits

on the interaction between vertical and horizontal product differentiation an application to banking the author studies the conditions under which banks offer remote access note there exists interaction between location and taste for remote access offering remote access is an instrument to partially segment depositors according to their taste for that technology the interaction between location and taste for remote access enhances this effect different equilibria emerge as the result of two effects first introducing remote access steals depositors from the opponent as the product specification becomes more appealing second deposit rate competition is affected as remote access determines the substitutability of banks copyright 1996 by blackwell publishing ltd

pricing and product line strategy in a supply chain with risk averse players abstract we study the pricing and product line strategy of a risk averse manufacturer who sells her products through a risk averse retailer we identify the conditions under which the manufacturer extends her product line or replaces the old product with a new product and find that i a higher retailer s risk aversion decreases the retail price but increases the unit wholesale price ii the manufacturer extends the product line if the price caps for both products are sufficiently high both her risk aversion and product substitutability are sufficiently low iii the manufacturer discontinues the old product if the relative price cap of the new product to the old product is sufficiently high her risk aversion is medium and product substitutability are sufficiently high further we find that i the decentralization of supply chain may increase product line length if the retailer s risk aversion and product substitutability are sufficiently high otherwise it may decrease product line length ii the endogenization of quality design increases the motivation to introduce a new product and iii the manufacturer extends or replaces the product line if quality cost is not too high

cournot competition in a differentiated oligopoly abstract this paper studies product quantity equilibria in an oligopoly products are interpreted as qualities and each firm chooses a quality quantity pair simultaneously it is well known that a pure strategy equilibrium in product price pairs does not exist in this model but a pure strategy equilibrium in product quantity pairs exists furthermore in an example widely studied in the literature the equilibrium has nice asymptotic properties

profitable pricing when market segments overlap in this paper we analyze profitable pricing strategies when market segments overlap overlapping markets are segments that are not perfectly sealed and leakage between them can occur different consumers are assumed to incur possibly different transaction costs if they choose to purchase in the low price market a monopolist seller knows the distribution of transaction costs across consumers and must choose an optimal pricing strategy in particular the monopolist must decide whether to charge a single price or to price differentiate conditions are derived under which price differentiation will be the most profitable strategy when price differentiation is optimal the equilibrium amount of leakage is determined endogenously unlike the standard economics textbook model of price discrimination in which zero leakage is determined exogenously and is usually given as a necessary condition for price discrimination we show that zero leakage is not necessary for differential pricing to be optimal and that

the economics of product variety a survey demand for variety may arise from a taste for diversity in individual consumption and or from diversity in tastes even when each consumer chooses a single variant the full degree of variety potentially demanded will not in general be supplied because scale economies even to a small degree mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants the economics of product variety consists essentially in analysing the effect of this balance in different situations and comparing the degree of product variety for different market structures with each other and with the optimum the survey commences with the work on market structures with single product firms generalized monopolistic competition tracing modern developments in both the chamberlinian and hotelling traditions the latter has been particularly fruitful due to the expansion of the original locational ideas into virtual spaces in product characteristics the emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures including strategic market preemption although most work has been in a full information context there have been advances in product variety under imperfect information either by consumers to properties of the firms products or firms as to consumers demands

price competition in multimarket duopolies in this article we analyze the pricing strategies offirms that compete for the demand of an assortment of goods in a complete information static framework in particular we model the competition between two symmetric firms in a market that consists of two types of consumers each of which may buy one unit of both goods sold by the two firms we show that all nash equilibria are such that neither firm charges the same price for both goods interestingly under certain conditions thefirms jointly price discriminate between the two types of consumers and may even achieve the same level of profits as if they maximized joint profits for another set of conditions the unique equilibrium is such that the price for one of the goods and the price for the bundle are the same as the price of the good in a standard hotelling model with one good finally we show that if these equilibria exist both firms prefer to sell both goods rather than specialize in either one of them these results are a direct consequence of the interplay between the multimarket rivalry and the existence of more than one market segment as modelled in this article

optimal forestry contracts under asymmetry of information in this paper i analyze optimal royalty contracts in forestry when the harvesting firm has private information on the cost of harvesting this infinite horizon forest rotation model with asymmetry of information on the cost parameter results in a dynamic incentive problem depending on whether the costs are correlated over time or not the firm either receives rent or receives no rent associated with the continuation part of the rotation choice i characterize the optimal contract explicitly in both cases i also examine the loss in expected welfare surplus resulting from the use of a linear contract instead of the more general non linear contract

operationalizing technology improvements in product development decision making abstract achieving competitive advantage and price premiums in many technology based markets requires the incorporation of current technology in new products to do so firms in hyper competitive environments increasingly plan and design their products concurrent with the independent development and validation of underlying technologies simultaneous validation of a core technology has important implications for a company s product positioning and launch sequence decisions making these traditional marketing decisions relevant to operations managers prior research has shown that to minimize cannibalization in the absence of such improvements in technology a firm should not launch low end products before high end products however concurrent evolution of technology can make it desirable and even necessary to introduce low end products before high end products this is because in technology based industries improvements in technology delay the introduction of a high end product and a firm must trade off the benefit of launching the low end product earlier greater discounted profits against the cost of cannibalization of high end product sales high end product cannibalization can be further reduced by offering the customer an option to upgrade from the low end to high end product with important implications for the firm s product positioning and introduction sequence decisions based on our study in the high technology industry we model the product positioning and introduction sequence decisions under the simultaneous evolution of technology our analysis indicates that it may be optimal in a variety of circumstances for a firm to launch products in an increasing order of performance even in the absence of network externalities besides presenting analytical results for product positioning and profit from different introduction sequences the paper also makes a contribution to managerial practice by providing insights in the form of a conceptual framework

when is price discrimination profitable we consider a general model of monopoly price discrimination and characterize the conditions under which price discrimination is and is not profitable we show that an important condition for profitable price discrimination is that the percentage change in surplus i e consumers total willingness to pay less the firm s costs associated with a product upgrade is increasing in consumers willingness to pay we refer to this as an increasing percentage differences condition and relate it to many known results in the marketing economics and operations management literatures

durable goods leasing in the presence of exporting used products to an international secondary market abstract with the rapid growth of global trade used durable goods from wealthy countries increasingly find their way into the secondary market of less wealthy countries exporting used products to a physically separate market not only removes cannibalization for new products at home but also fetches additional revenue in this paper we investigate the implications of exporting used products to international secondary markets in the durable goods industry we find that such a practice may significantly stimulate new product lease on the home market an effect in which the market attractiveness and product quality are mutually reinforcing we discover that removing cannibalization pressure is more of a priority than generating additional revenue while exporting used products if the export is carried out by an agent who exports used products bought from oem original equipment manufacturer we observe the disadvantage of double marginalization in a channel structure which slows down export and causes quantity distortion and also reduces the effectiveness of government stimulus however if the agent and oem set export price based supply and demand equilibrium this reduces the quantity distortion one special characteristic of used products trade across borders is the involvement of governments on both sides of the border the government measures include penalties imposed on aging durable goods and trade barriers we find that legislation of penalizing used products on the domestic market can stimulate export but it does not have an intended effect of stimulating new products produced at home the channel structure worsens the problem

lowering customer evaluation costs product differentiation and price competition when match uncertainty is resolved via costly evaluation the first product sampled by a customer is more likely to make the sale this prompts firms to lower their products evaluation costs to attract customers to sample their products first such efforts by firms are called customer learning investment cli when product quality is freely observable but horizontal match is not we examine how cli choices interact with quality and price competition in a duopoly cli has a competition effect in that a higher cli of a firm increases its demand but decreases that of its rivals in the market covered duopoly both qualities will decrease increase when the high end low end firm invests more in customer learning and remain unchanged when they invest equally relative to when neither firm invests we further show that the firm with a higher relative production efficiency invests more in customer learning than the competitor in the market not covered duopoly cli by the low end firm also creates a market

incorporating consumer price expectations in diffusion models in this paper the sensitivity of the optimal price path of a new durable product to the price expectations of consumers is examined consumers enter the market every period in a diffusion type framework during the initial periods more consumers enter the market due to word of mouth influence but in the latter periods saturation effects set in the entering set of cohorts form expectations about future prices and in a stable equilibrium these expectations are fulfilled it is shown that the price path is cyclical with the following properties at the beginning of the cycle the price is at its highest level it falls monotonically over time reaching a low price at the end of the cycle equal to the reservation price of the consumers willing to pay less the cycle lengths are not equal the sensitivity of the optimal price path to model parameters is explored through a numerical procedure

a cooperative game theory model of quantity discounts quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and the seller negotiate over the order quantity and the average unit price all units and incremental quantity discounts that permit transaction at a negotiated outcome are described the effects of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models

chapter 11 pricing models in marketing publisher summary this chapter brings together a set of diverse efforts in the recent literature on the modeling of price decisions and related questions in marketing there has been an impressive growth in the array of topics investigated in the literature various trends in the development of pricing models are evident from the foregoing review first one trend has been to develop theoretical models to describe observed pricing strategies in the marketplace and to derive conditions under which certain strategies are optimal this trend is clearly evident when one considers the area of dynamic pricing models another trend is an attempt to develop pricing models in which certain aspects of consumer behavior e g asymmetric response to price increases versus price decreases are incorporated this development is quite recent and does offer a large potential a third dominant direction is the use of game theoretic models for developing equilibrium pricing strategies

increasing quality sequence when is it an optimal product introduction strategy in this paper we analyze the optimal introduction timing of a seller s products targeted at segments that differ in their willingness to pay for quality past studies suggest that an introduction sequence of a high quality product followed by a lower quality version of the product may mitigate the cannibalization effects of the low quality product on profits from the high quality product we show that if customers who value quality more possess an outside option such as a substitute product as may be the case with replacement buyers a seller may find it optimal to follow a low quality product with a higher quality one the latter being targeted at replacement buyers furthermore the ability of the seller to commit to future qualities accentuates the sequential increase in quality in the presence of such buyers thus we show that conditions other than uncertainty or technological improvements occurring over time may justify a seller adopting a strategy of sequentially increasing quality this paper was accepted by j miguel villas boas marketing

green product design in supply chains under competition abstract in this paper we investigate the green product design issues in supply chains under competition our research questions address how supply chains decisions on the greenness of products are affected by factors such as supply chain structures centralized and decentralized the green product types development intensive product or marginal cost intensive product and the types of competition price competition and greenness competition with a game theoretic approach our model starts with a simple supply chain with one manufacturer and one retailer then the model is expanded to include a horizontal retailer competition case and six cases of competing supply chains our results indicate that 1 the distortion from a non coordinated supply chain the double marginalization effect has counter intuitive impact on the degree of product greenness 2 supply chain price competition at the retailer level may positively influence the equilibrium greenness while the product greenness competition reduces the equilibrium greenness and the joint impact from price and greenness competition on equilibrium greenness depends on the relative strength of the two types of competition

the profit benefits of category management the practice of category management i e empolying a single decision maker who is responsible for a firm s product line has been advocated as a superior alternative to brand management i e in

designing a family of development intensive products faced with fragmented markets saturated and demanding customers and global competition firms increasingly must design and offer a line of innovative quality differentiated products to target customers with differing willingness to pay wtp in this context designing a special class of products that we term development intensive products dips for which the fixed costs of development far outweigh the unit variable costspresents some unique managerial challenges examples of such development intensive offerings abound in a number of industries including the pharmaceutical information and entertainment sectors of the economy our contributions in this paper are threefold a to show that managerial insights from the traditional approach to product line design developed for unit variable cost intensive products do not carry over to dips b to present new mechanisms and managerial guidelines for designing a family of products for which development costs cannot be ignored and c to illustrate the insights with an extended industry example we find that the design approach based on degrading or subtracting value from a high end product to obtain a subsumed low end edition shown in the literature to be an effective approach for designing unit cost intensive products can be inappropriate for dips this limitation of value subtraction has implications for the number of variants and the sequence in which they are developed as an alternative to a subsumed product design strategy we propose and examine the overlapped product design approach in which a low end product is not completely subsumed within its high end counterpart but differentiated on additional vertical quality dimensions our results both explain the recent challenges of firms with subsumed low end products and guide them in designing a product line to successfully address emerging low end market segments

when more alternatives lead to less choice this paper shows that when the alternatives offered to consumers span the preference space as it would be chosen by a firm search or evaluation costs may lead consumers not to search and not to choose if too many or too few alternatives are offered if too many alternatives are offered then the consumer may have to engage in many searches or evaluations to find a satisfactory fit this may be too costly and result in the consumer avoiding making a choice altogether if too few alternatives are offered then the consumer may not search or choose fearing that an acceptable choice is unlikely these two forces result in the existence of a finite optimal number of alternatives that maximizes the probability of choice

a regional dynamic general equilibrium model of alternative climate change strategies outcomes and noncooperative equilibria this study finds that cooperative policies show much higher levels of emissions reductions than do noncooperative strategies that there are substantial differences in the levels of controls in both the cooperative and the noncooperative policies among different countries and that high income countries may be the major losers from cooperation jel h41 q4 q2 q20

letting the market work for you an evolutionary perspective on product strategy managers must choose to allocate scarce resources either to the maintenance of a range of products tailored to heterogeneous consumer preferences or to the efficient production of a small number of products in addition managers must choose the degree to which they periodically cull the product line vigorous selection removes poor performers from the product line but this action simultaneously impairs the firm s ability to monitor changes in consumer preferences empirical evidence from the computer workstation industry reveals that the ideal choice of product variety depends on the competitive ecology of the industry product variety becomes less valuable as the total number of products on the market increases but it increases in value as uncertainty makes the accurate prediction of demand difficult copyright 2000 john wiley sons ltd

the discriminating consumer product proliferation and willingness to pay for quality abstract the authors propose that a crowded product space motivates consumers to better discriminate between options of different quality specifically this article reports evidence from three controlled experiments and one natural experiment that people are prepared to pay more for high quality products and less for low quality products when they are considered in the context of a dense as opposed to a sparse set of alternatives to explain this effect the authors argue that consumers uncertain about the importance of quality learn from observing market outcomes product proliferation reveals that other consumers care to discriminate among similar alternatives and in turn this inference raises the importance of quality in decision making

young workers and quit behaviour a model is set up to explain the quit behaviour of new entrants to the labour market it uses an incentive opportunity approach to integrate existing relevant arguments from search and information theory and human capital analysis it also provides for impetuous quits the model is tested by an examination of a disaggregated data set concerning a single cohort of 16 year old school leavers in the first year after gaining full time work the theory received strong support for example in the main model seven out of the ten coefficients were highly significant interestingly even in a time of deepening recession the existence of the job shopper seemed to be apparent

commonality decisions when designing for multiple markets abstract it is well established that a manufacturer s commonality decisions between related products are driven by trade offs between cost savings from standardization and demand effects of customization prior research has examined these trade offs in the context of product line design for a single geography where cannibalization is a primary concern however the insights from a single market may not readily apply when serving related products for different geographies where cannibalization ceases to be a concern the downside of commonality for geographically separated markets arises from a mismatch in customer preferences which results in disutilities in this paper we model the trade off between the consumer side disutilities and the cost side scale economies in the presence of demand uncertainty and derive the optimal extent of commonality between products for both the markets in the context of two product development strategies i primary market centric design pmd and ii design for multiple markets dfm our insights from analytical and numerical analysis show that when consumers are very picky and market uncertainty is low the dfm strategy outperforms the pmd strategy counter to the practice of introducing primary market centric products into emerging markets our study demonstrates the need for more customization especially in small but uncertain markets our research has important implications for automakers in integrating the diversity in tastes while making commonality decisions for multiple markets

chapter 17 marketing strategy models publisher summary despite the advances in the sophistication and proliferation of marketing science models relatively few true marketing strategy models have been developed and those that have been developed generally had limited impact on management the gap between management needs for models that help them generate evaluate and implement better marketing strategies and the available models especially non traditional is narrowing as the environment and the characteristics of successful businesses are changing the nature of the marketing paradigm and the nature of desired marketing strategy models is changing as well