does price elasticity vary with economic growth a cross category analysis abstract how does price sensitivity change with the macroeconomic environment the authors explore this question by measuring price elasticity using household level data across 19 grocery categories over 24 quarters for each category they estimate a separate random coefficients logit model with quarter specific price response parameters and control functions to address endogeneity this specification yields a novel set of 456 elasticities across categories and time that are generated using the same method and therefore can be directly compared on average price sensitivity is countercyclical it rises when the macroeconomy weakens however substantial variation exists and a handful of categories exhibit procyclical price sensitivity the authors show that the relationship between price sensitivity and macroeconomic growth correlates strongly with the average level of price sensitivity in a category they examine several explanations for this result and conclude that a category s share of wallet is th

endogeneity in brand choice models applications of random utility models to scanner data have been widely presented in marketing for the last 20 years one particular problem with these applications is that they have ignored possible correlations between the independent variables in the deterministic component of utility price promotion etc and the stochastic component or error term in fact marketing mix variables such as price not only affect brand purchasing probabilities but are themselves endogenously set by marketing managers this work tests whether these endogeneity problems are important enough to warrant consideration when estimating random utility models with scanner panel data our results show that not accounting for endogeneity may result in a substantial bias in the parameter estimates

developing effective policies for the sustainable development of ecological agriculture in china the case study of jinshan county with a systems dynamics model abstract this paper focuses on a search for concrete policy measures to facilitate the overall sustainability of ecological agricultural development at a county level for this purpose a system dynamics model aiseem has been developed to explore the potential long term ecological economic institutional and social interactions of ecological agricultural development through a case study of jinshan county in china the model provides an experimental platform for the simulation and analysis of alternative policy scenarios the results indicate that the diversification of land use patterns government low interest loans and government support for training are important policy measures for promoting the sustainable development of ecological agriculture at least in the case study context in addition the study reveals that environmentally sound technology e g biogas project alone cannot sufficiently induce farmers to adopt ecological agricultural practices limited availability of information risk aversion and high transaction costs are major barriers to the adoption of alternative agricultural practices in this regard the importance of capacity building and institutional arrangements are emphasised through the development of an improved policy making process on agricultural sustainability this case study highlights the importance of combining the ecological economics analytical framework with the system dynamics modelling approach as a feasible integrated tool to provide insight into the policy analysis of ecological agriculture and thus set a solid basis for effective policy making to facilitate its sustainable development on a regional scale

simulating the effects of environmental and market variability on fishing industry structure abstract an agent based model comprising a fish stock a fishing fleet and a fish market is used to investigate the combined effects of environmental and market variability on the structure of a fishery over 15 year simulations agents make daily fishing decisions and annual entry exit and investment decisions based on the fishery s past economic outcomes and their individual risk preferences and opportunity costs e g an alternative source of income environmental variability is simulated through fishing success variability while market variability is simulated through changes in the elasticity of the demand curve i e the responsiveness of market prices to changes in daily landings our findings indicate that changes in variability lead to changes in economic and biological conditions of the fishery by influencing the composition of risk preferences within the fleet counter to expectations market stability did not dampen the negative impacts of environmental variability but rather stimulated over investment and increased harvesting by a small number of risk seeking fishers results from this research suggest that climate driven increases in fisheries variability coupled with increases in market integration that act to reduce local price signals may lead to inefficient investments and reduced fishery resources

ecological and economic sustainability in fishery management a multi agent model for understanding competition and cooperation recent studies have shown that many marine ecosystems are experiencing an accelerating loss of population and biodiversity it is apparent that there is a growing disparity between the available supply of fish and the desire of the growing world population to catch them although studies have begun to question the ecological sustainability of managed fishery systems they often omit the corresponding effects on the economic sustainability of fishery industries this is particularly important in rural coastal areas where the fishing industry is often a dominant employer in this article we analyze the interactions between economic and ecological dynamic systems using a multi agent dynamic model of fishery management multiple agents fishers harvest multiple fish species and adapt the amount and allocation of their effort to their value functions which are given as net profits of the fish harvest sold for a market price this is largely unique in fishery models since many econometric studies view fishers as represented by homogenous average agents we introduce and compare two different decision rules governing the behavior of fishers engaged in a competitive market we demonstrate a situation where both behaviors lead to a decline of all fish stocks as well as profits for most fishers as an alternative we introduce a cooperative approach in which fisheries jointly set sustainable limits for total harvest and effort that are then distributed to the fishers according to distribution rules the simulation reveals that fish stocks and profits can stabilize at significantly higher levels in the cooperative case leading to a continuous accumulation of capital for all fishers this model demonstrates key aspects of overfishing conflicts that can be overcome through planned fishing quotas and cooperative market mechanisms it also demonstrates a novel approach for simulating the dynamic behavior of heterogeneous fishers

a viability analysis for a bio economic model abstract this paper presents a simple dynamic model dealing with the management of a marine renewable resource but instead of studying the ecological and economic interactions in terms of equilibrium or optimal control we pay much attention to the viability of the system or in a symmetric way to crisis situations these viability crisis situations are defined by a set of economic and biological state constraints the analytical study focuses on the compatibility between the state constraints and the controlled dynamics using the mathematical concept of viability kernel we reveal the situations and if possible management options to guarantee a perennial system going further we define overexploitation indicators by the time of crisis function in particular we point out irreversible overexploitation configurations related to the resource extinction

practice prize paper implementing integrated marketing science modeling at a non profit organization balancing multiple business objectives at georgia aquarium georgia aquarium ga a non profit organization is the world s second largest aquarium by water volume and is among the most popular tourist destinations in the united states recently ga management has observed that the organization s growth trajectory is stagnating while other aquariums face a similar trend ga wants to be proactive and reverse this direction they face a multifaceted business challenge involving four conflicting objectives 1 how to increase revenues without increasing ticket prices 2 how to increase attendance without compromising visitor satisfaction 3 how to increase the impact of media investments without spending more 4 how to attract customers with long term value potential to address these challenges we developed an integrated approach consisting of multiple marketing science models including data envelopment analysis competition analysis spatial analysis media optimization analysis and pass holder lifetime net revenue analysis based on the findings of our

how economic contractions and expansions affect expenditure patterns in this study we attempt to understand how household budget allocations across various expenditure categories change when the economy is in recession or expansion the common assumption is that a household s tastes would not change as a function of economic conditions and therefore any adjustments in expenditure patterns during economic contractions expansions would simply be due to changes in the consumption budget standard economic models translate these budgetary effects into lateral movements along a set of fixed engel curves which relate category expenditure shares to total expenditures we propose and test a conceptual framework based on the notion of relative consumption which prescribes that for any given total consumption budget expenditure shares for positional goods services will decrease during a recession while shares for nonpositional goods services will increase i e shifting the entire engel curve upward or downward depending on the nature of the expenditure category and the economic conditions

price elasticities and demand side real rigidities in micro data and in macro models abstract high degrees of demand side real rigidities are able to generate the large monetary non neutrality found in aggregate data this paper provides micro based evidence on the key parameters governing this rigidity using european homescan data we find strong evidence for demand side real rigidity which is however significantly lower than that normally assumed in macro models in a menu cost model calibrated to our estimates we show that these estimates are associated with reasonable values for production side parameters but they are not able to generate the degree of monetary non neutrality observed in macro data

riding the waves revealing the impact of intrayear category demand cycles on advertising and pricing effectiveness abstractgoing beyond traditional seasonality this research introduces the concept of the intrayear category demand cycle this phenomenon reflects demand cycles most consumer packaged goods categories experience throughout the year with periods of higher demand following periods of lower demand the author argues that acknowledging the existence of these cycles and understanding their impact on both advertising and pricing effectiveness and practice is critical for marketers specifically the author demonstrates how both advertising and price elasticities and observed advertising and prices evolve along these cycles for a unique set of 252 brands ranging from high advertising high priced premium mass brands to low advertising low priced value niche brands in 61 consumer packaged goods categories overall both advertising efectiveness and observed advertising are found to be stronger at demand peaks surprisingly consumer reactions to price decreases are weaker at demand peaks whereas reactions

ricardian equivalence for local government bonds a utility maximization approach abstract we show that ricardian equivalence holds for local public finance if and only if subnational units use property taxes however for other tax bases the unique equilibrium has the same economic outcome as in models where districts may not issue debt

retail competition and the dynamics of demand for tied goods we present a demand system for tied goods incorporating dynamics arising from the tied nature of the products and the stockpiling induced by storability and durability we accommodate competition across tied good systems and competing downstream retail formats by endogenizing the retail format at which consumers choose to stockpile inventory this facilitates measurement of long run retail substitution effects and yields estimates of complementarities within and substitution across competing systems of tied goods we present an empirical application to an archetypal tied goods category razors and blades we discuss the implications of measured effects for manufacturer pricing when selling the tied products through an oligopolistic downstream retail channel and assess the extent to which retail substitution reduces channel conflict

system behaviour modelling for demand response provision in a smart grid while pilot projects in the smart grid domain have abounded through public and private efforts there is still uncertainty in identifying effective business models for the smart grid in this paper we take the view of a new entrant in this market acting as a third party provider of demand response new entrants are a key player in emerging technological domains but simulation and policy analysis from this perspective have not been forthcoming we present a novel approach for evaluating business models within a regulatory context and avoid committing to specific technical solutions but instead embark on a parameter exploration through simple yet insightful agent based models our simulations analyse the impact of system performance by three key variables participant population size household flexibility in terms of the maximum number of dr events allowed and size of load shifting shedding available the simulations indicate that benefits of avoided capital investment leads to valuing a participating household at approximately 1800 over a 20 year period these results show how mandated infrastructure influenced by policy can affect the value proposition of a demand response service and provide a useful reference for system level parameter requirements with weak business models policy decisions can be crucial in providing the impetus needed to spur growth in this market

the price elasticity of selective demand a meta analysis of econometric models of sales the author describes a meta analysis of econometric studies that estimated the elasticity of selective sales or market share to price the literature review yielded 367 suitable price elasticities

marketing budget allocation across countries the role of international business cycles a key conundrum facing organizations is how to adjust marketing budgets in response to the business cycle while most firms use procyclical spending spending less during economic contractions academic studies often recommend countercyclical spending spending more during contractions which begs the following question what is the right thing to do the spending problem is compounded further when demand is not just driven by one country s business cycle but by the nonsynchronized business cycles of multiple countries as is the case for tourism marketing aiming to attract tourists originating from different countries we derive insights into the best way to allocate marketing budgets across countries under varying economic conditions we show that the allocation decisions are driven by the procyclical versus countercyclical nature of three factors unit sales marketing effectiveness and per unit profit contribution to study how unit sales and marketing effectiveness respond to the business cycle

the periodicity of pricing abstract retail pricing data combine multiple decisions e g regular pricing and discounting that are possibly made by multiple decision makers e g retailers and manufacturers for example temporary price reductions high frequency price changes can be used to price discriminate in the short run whereas regular price adjustments low frequency price changes might reflect changes in long term costs or demand time disaggregation cannot disentangle these factors because frequency aggregation exists even when data are analyzed at the lowest possible level of temporal aggregation because little is known about the nature of pricing interactions across various planning cycles this article develops several empirical generalizations about the role of periodicity in pricing using week store stockkeeping unit level price data in 35 grocery categories the authors find that 1 cross brand correlation in prices occurs at multiple planning horizons and the planning horizon of the predominant interacti

modeling dynamic heterogeneity using gaussian processes marketing research relies on individual level estimates to understand the rich heterogeneity of consumers firms and products while much of the literature focuses on capturing static cross sectio

income and wealth effects on private label demand evidence from the great recession we measure the causal effects of income and wealth on the demand for private label products prior research suggests that these effects are large and in particular that private label demand rises during recessions our empirical analysis is based on a comprehensive household level transactions database matched with price information from store level scanner data and wealth data based on local house value indices the great recession provides a key source of the variation in our data showing a large and geographically diverse impact on household incomes over time we estimate income and wealth effects using within variation of income at the household level and wealth at the zip code level our estimates can be interpreted as income and wealth effects consistent with a consumer demand model based on utility maximization we establish a precisely measured negative effect of income on private label shares the effect of wealth is negative but not precisely measured however the estimated effect sizes

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

business cycles and the relationship between concentration and price cost margins using a newly constructed panel data base we examine changes in price cost margins in 284 manufacturing industries between 1958 and 1981 a key finding is a dramatic narrowing of the spread between the margins of concentrated and unconcentrated industries over this period we provide evidence that this narrowing is a result of the greater sensitivity of price cost margins in more concentrated industries to demand fluctuations this finding is robust to the inclusion of other industry variables and to measures of import competition the results indicate that cross sectional estimates of the concentration margins relationship are likely to be both biased and misleading

state dependence and alternative explanations for consumer inertia for many consumer packaged goods products researchers have documented inertia in brand choice a form of persistence whereby consumers have a higher probability of choosing a product that they have purchased in the past using data on margarine and refrigerated orange juice purchases we show that the finding of inertia is robust to flexible controls for preference heterogeneity and not due to autocorrelated taste shocks thus the inertia is at least partly due to structural not spurious state dependence we explore three economic explanations for the observed structural state dependence preference changes due to past purchases or consumption experiences which induce a form of loyalty search and learning our data are consistent with loyalty but not with search or learning properly distinguishing among the dierent sources of inertia is important for policy analysis because the alternative sources of inertia imply qualitative dierences in firm s pricing incentives and lead to quantitatively dierent equilibrium

new empirical generalizations on the determinants of price elasticity abstract the importance of pricing decisions for firms has fueled an extensive stream of research on price elasticities in an influential meta analytical study tellis 1988 summarized price elasticity research findings until 1986 however empirical generalizations on price elasticity require modifications because of 1 changes in market characteristics i e characteristics of brands product categories and economic conditions and 2 changes in the research methodology used to assess price elasticities therefore the authors present a meta analysis of price elasticity with new empirical generalizations on its determinants across a set of 1851 price elasticities based on 81 studies the average price elasticity is 2 62 a salient finding is that over the past four decades sales elasticities have significantly increased in magnitude whereas share and choice elasticities have remained fairly constant the authors find that accommodating price endogeneity has a strong magnitude increasing impa

the shopping basket a model for multicategory purchase incidence decisions consumers make multicategory decisions in a variety of contexts such as choice of multiple categories during a shopping trip or mail order purchasing the choice of one category may affect the selection of another category due to the complementary nature e g cake mix and cake frosting of the two categories alternatively two categories may co occur in a shopping basket not because they are complementary but because of similar purchase cycles e g beer and diapers or because of a host of other unobserved factors while complementarity gives managers some control over consumers buying behavior e g a change in the price of cake mix could change the purchase probability of cake frosting co occurrence or co incidence is less controllable other factors that may affect multi category choice may be unobserved household preferences or observed household demographics we also argue that not accounting for these three factors simultaneously could lead to erroneous inferences we then develop a conceptual framework that incorporates complementarity co incidence and heterogeneity both observed and unobserved as the factors that could lead to multi category choice we then translate this framework into a model of multi category choice our model is based on random utility theory and allows for simultaneous interdependent choice of many items this model the multivariate probit model is implemented in a hierarchical bayes framework the hierarchy consists of three levels the first level captures the choice of items for the shopping basket during a shopping trip the second level captures differences across households and the third level specifies the priors for the unknown parameters we generalize some recent advances in markov chain monte carlo methods in order to estimate the model specifically we use a substitution sampler which incorporates techniques such as the metropolis hit and run algorithm and the gibbs sampler the model is estimated on four categories cake mix cake frosting fabric detergent and fabric softener using multicategory panel data the results disentangle the complementarity and co incidence effects the complementarity results show that pricing and promotional changes in one category affect purchase incidence in related product categories in general the cross price and cross promotion effects are smaller than the own price and own promotions effects the cross effects are also asymmetric across pairs of categories i e related category pairs may be characterized as having a primary and a secondary category thus these results provide a more complete description of the effects of promotional changes by examining them both within and across categories the co incidence results show the extent of the relationship between categories that arises from uncontrollable and unobserved factors these results are useful since they provide insights into a general structure of dependence relationships across categories the heterogeneity results show that observed demographic factors such as family size influence the intrinsic category preference of households larger family sizes also tend to make households more price sensitive for both the primary and secondary categories we find that price sensitivities across categories are not highly correlated at the household level we also find some evidence that intrinsic preferences for cake mix and cake frosting are more closely related than preferences for fabric detergent and fabric softener we compare our model with a series of null models using both estimation and holdout samples we show that both complementarity and co incidence play a significant role inpredicting multicategory choice we also show how many single category models used in conjunction may not be good predictors of joint choice our results are likely to be of interest to retailers and manufacturers trying to optimize pricing and promotion strategies across many categories as well as in designing micromarketing strategies we illustrate some of these benefits by carrying out an analysis which shows that the true impact of complementarity and co incidence on profitability is significant in a retail setting our model can also be applied to other domains the combination of item interdependence and individual household level estimates may be of particular interest to database marketers in building customized cross selling strategies in the direct mail and financial service industries

an open access fishery with rational expectations explain the evolution of the fish stock and the boat fleet as well as determine their equilibrium levels 2 while the changes in the fish stock are described by a biological rule entry and exit from the fishing industry are determined by how expectations are formed we examine a general model in which entry and exit are proportional to the present value of expected profits and compare two special cases of adaptive myopic expectations and rational expectations although both expectations mechanisms lead to the same equilibrium values they lead to different adjustment paths where expectations solely depend on current values myopic expectations it is well known that boats enter the fishery only when the fish stock is greater than its steady state stock 3 with rational expectations however boats may enter when the fish stock is much lower than its steady state value provided the boat fleet is sufficiently small this difference in adjustment is observable and in principle leads to an obvious test on how agents form expectations section 2 develops a general dynamic model for studying fisheries in section 3 we show that the model standardly used in the literature is equivalent to a myopic adaptive expectations model a rational expectations model is analyzed in section 4 the standard and rational expectations models are compared in section 5 section 6 illustrates this comparison using a simulation based on a schaefer model of the pacific halibut fishery section 7 presents the conclusions

actively learning by pricing a model of an experimenting seller this article presents a model of a rational seller who is actively learning the slope of his demand curve via his pricing strategy consequently this seller optimally experiments with his price resulting price patterns show a tendency for discreteness as observed in the data which has proved to be a major challenge to most price setting models the experimentation motive can also replicate the observation that prices are more volatile than costs as well as the presence of many idiosyncratic price changes in the data it can do so without a need to assume the existence of large idiosyncratic shocks

price and advertising effectiveness over the business cycle abstract firms are under increasing pressure to justify their marketing expenditures this evolution toward greater accountability is reinforced in harsh economic times when marketing budgets are among the first to be reconsidered to make such decisions managers must know whether and to what extent marketing s effectiveness varies with the economic tide however surprisingly little research addresses this issue therefore the authors conduct a systematic investigation of the business cycle s impact on the effectiveness of two important marketing instruments price and advertising to do so they estimate time varying short and long term advertising and price elasticities for 150 brands across 36 consumer packaged goods categories using 18 years of monthly u k data from 1993 to 2010 the long term price sensitivity tends to decrease during economic expansions whereas long term advertising elasticities increase during contractions the long term own and cross price elasticities increase moreover

on conflict over natural resources abstract this paper considers a game theoretic framework of repeated conflict over natural resource extraction in which the victory in each engagement is probabilistic and the winner takes all the extracted resource every period each contesting group allocates its capabilities or power between resource extraction and fighting over the extracted amount the probability of victory rises with fighting effort but a weaker group can still win an encounter the victorious group wins all of the extracted resources and converts them to power and the game repeats in one model groups openly access the resource in a variant of the model the stronger group can access a larger part of the resource than its rival while in a second variant of the model the advantage of the dominant group is made more decisive than in the first two models our models generate outcomes that mimic several aspects of real world conflict including full military mobilization defeats in one or repeated battles victories following defeats changes in relative dominance and surrender we examine comparative dynamics with respect to changes in the resource attributes resource extraction initial power allocation fighting capabilities and power accumulation the policy implications are evaluated and future research avenues are discussed

elasticities of transport fuels at times of economic crisis an empirical analysis for spain abstract this paper provides an updated calculation of the price and income responsiveness of spanish consumers of transport fuels with an explicit exploration of the effects of the recent economic crisis we examine separate gasoline and diesel demand models using a set of estimators on a panel of 16 spanish regions over the period 1999 2015 the paper confirms the persistence of low own price elasticities both for diesel and gasoline in the short and long runs it also shows that the crisis of 2008 2013 slightly increased the price elasticity of demand for transport fuels with a higher effect on diesel than on gasoline by contrary the crisis slightly reduced the income elasticity of transport fuel demand given the intensity and length of the economic recession in spain the results of this paper may be useful to anticipate the effects of domestic public policies that impact transport fuel prices as well as to advance some of the potential consequences of crises elsewhere

a model of regulated open access resource use abstract this paper develops a model of regulated open access resource exploitation the regulatory model assumes that regulators are goal oriented choosing target harvest levels according to a safe stock concept these harvest quotas are implemented by setting season lengths conditioned on the industry fishing capacity the industry enters until rents are dissipated conditioned on season length regulations harvest levels fishing capacity season length and biomass are determined jointly using parameter estimates from the long regulated north pacific halibut fishery predictions of these variables from the regulated open access model are compared to predictions that arise from the gordon model

international fish wars the strategic roles for fleet licensing and effort subsidies abstract this article examines the problem of noncooperative international fishing by analyzing the strategic rent shifting roles for such well known national management policies as fleet licensing and effort subsidies it is shown that the noncooperative equilibrium in each policy takes the form of a prisoner s dilemma with dissipated rents in the fishery it is also shown that strategic effort subsidies can only lead to incomplete rent dissipation but strategic fleet licensing can lead to complete rent dissipation the models developed in this article may help to provide an explanation for the persistence of large and excessively subsidized national fleets that exploit depleted international fish stocks

challenges for economic policy in sustainable management of marine natural resources the sustainable management of marine natural resources presents particular challenges to the managers of those resources while such management has typically been based on biological considerations it is argued that this has resulted in overexploitation and destruction of important marine assets in industries such as fishing and tourism consequently it is concluded that other approaches are needed with the use of economic concepts and management tools particularly relevant at the same time the human welfare outcomes of the application of various policy instruments must be carefully considered while biological information is critical to the formulation and implementation of successful management regimes it is concluded that the application of economic instruments will become more attractive to resource managers with these instruments underpinned by consideration of property rights and an appropriate allocation of economic rents a greater focus on these economic matters will take resource managers further in the direction of sustainable management of increasingly scarce marine resources the conclusions in the paper are supported by various case studies from fisheries and tourism 2001 elsevier science b v all rights reserved

determinants of store level price elasticity using weekly scanner data representing 18 product categories the authors estimated store specific price elasticities for a chain of 83 supermarkets they related these price sensitivities to a com

a control function approach to endogeneity in consumer choice models abstract endogeneity arises for numerous reasons in models of consumer choice it leads to inconsistency with standard estimation methods that maintain independence between the model s error and the included variables the authors describe a control function approach for handling endogeneity in choice models observed variables and economic theory are used to derive controls for the dependence between the endogenous variable and the demand error the theory points to the relationships that contain information on the unobserved demand factor such as the pricing equation and the advertising equation the authors approach is an alternative to berry levinsohn and pakes s 1995 product market controls for unobserved quality the authors apply both methods to examine households choices among television options including basic and premium cable packages in which unobserved attributes such as quality of programming are expected to be correlated with price without correcting for endogeneity aggregate d

assessing efficiency gains from individual transferable quotas an application to the mid atlantic surf clam and ocean quahog fishery delayed fishing fleet restructuring complicates the assessment of efficiency gains from individual transferable quota itq fisheries management programs this article presents a methodology to estimate harvest sector efficiency gains in lieu of incomplete fleet restructuring the methodology is applied to assess the efficiency gains in the mid atlantic surf clam and ocean quahog fishery itq program while roughly 128 vessels harvested clams under the previous management regime the analysis suggests that 21 25 vessels will remain under ltqs the efficiency gains are estimated to be between 11 1 million and 12 8 million annually 1990 dollars

investigating purchase incidence brand choice and purchase quantity decisions of households we develop a comprehensive utility maximizing framework to study the impact of marketing variables on the category purchase brand choice and purchase quantity decisions of households for frequently purchased packaged goods the model allows for dependence among the three decisions while ensuring that these decisions provide in combination the greatest possible utility to the household by accounting for variations in reservation prices and intrinsic brand preferences across households the modeling framework explicitly captures the effects of unobserved heterogeneity on all three purchase decisions the principal empirical finding from analyzing the a c nielsen data for the yogurt product category is that the substantive implications for the effects of marketing variables are sensitive to whether these effects are determined conditional or unconditional on a product category purchase our results show that reservation prices and intrinsic brand preferences vary across households and not accounting for these variations in the estimation could lead to biased estimates for the coefficients of the marketing variables a comparison of our results to those obtained from a nested logit model of purchase incidence and brand choice reveals that our proposed model performs better using both a formal statistical test as well as the criterion of predictive validity in a holdout sample of panelists further the purchase quantity model compares favorably with two alternative models of quantity choice in the validation sample

endogeneity and individual consumer choice abstract in many markets there is likely to be correlation both across periods in terms of the choices of one consumer and across consumers in terms of their choices in each period the former is caused by consumer heterogeneity and the latter may be the result of demand common shocks across consumers furthermore if firms partially observe these common shocks their market decisions may end up being endogenous and correlated with the common shocks because researchers cannot typically fully observe consumer heterogeneity and the common shocks the estimation method must account for the endogeneity of firms decisions in this article the authors present a test for endogeneity under unobserved consumer heterogeneity and common shocks which is based on a quasi likelihood estimation method to estimate the model parameters consistently when endogenous firm behavior unobserved heterogeneity and common shocks are present the test examines the differences in general method of moments coefficient estima

between group competition enhances cooperation in resource appropriation games abstract cooperation in public goods games increases in the presence of between group competition in this study we validate the effect of between group competition in a different social dilemma a resource appropriation game unlike the voluntary contributions setting group performance in this game increases with the exercise of a passive choice not appropriating units in an open access resource we conducted an incentivized experiment using 276 undergraduate students in which groups of four subjects played a resource appropriation game different groups within a session were ranked in each round according to the group s aggregate payoff this ranking determined a group performance multiplier which increased the payoffs in groups ranked above the median and decreased the payoffs in groups below the median the multipliers were small enough to keep the individual benefits from appropriation larger than the individual benefits from a higher payoff multiplier derived from an improvement in group ranking by not appropriating the resource unit we found that implementing this small group performance multiplier decreased the average appropriation by 31 this efficiency enhancing device generated a 19 percentage point increase in overall earnings in a given session

a dynamic model of rational addiction evaluating cigarette taxes addiction creates an intertemporal link between a consumer s past and present decisions altering their responsiveness to price changes relative to nonaddictive products we construct a dynamic model of rational addiction and endogenous consumption to investigate how consumers respond to policy interventions that aim to reduce purchases of cigarettes we find that on average the category elasticity is about 35 higher when the model correctly accounts for addiction however some policies spur substitution from more expensive single packs to less expensive cartons of cigarettes resulting in higher overall consumption for some consumers

the decomposition of promotional response an empirical generalization price promotions are used extensively in marketing for one simple reason consumers respond the sales increase for a brand on promotion could be due to consumers accelerating their purchases i e buying earlier than usual and or buying more than usual and or consumers switching their choice from other brands purchase acceleration and brand switching relate to the primary demand and secondary demand effects of a promotion gupta 1988 captures these effects in a single model and decomposes a brand s total price elasticity into these components he reports for the coffee product category that the main impact of a price promotion is on brand choice 84 and that there is a smaller impact on purchase incidence 14 and stockpiling 2 in other words the majority of the effect of a promotion is at the secondary level 84 and there is a relatively small primary demand effect 16 this paper reports the decomposition of total price elasticity for 173 brands across 13 different product categories on average we find that 25 of the elasticity is due to primary demand expansion i e purchase acceleration and 75 to secondary demand effects or brand switching thus while gupta s finding that the majority of promotional response stems from brand switching is supported the average magnitude of the effect appears to be smaller than first thought more important there is ample evidence that promotions have a significant primary demand effect the relative emphasis on purchase acceleration and brand switching varies systematically across categories and the second goal of the paper is to explain this variation as a function of exogeneous covariates in doing this we recognize that promotional response is the consumer s reaction to a price promotion and therefore develop a framework for understanding variability in promotional response that is based on the consumer s perspective of the benefits from a price promotion these benefits are posited to be a function of i category specific factors ii brand specific factors and iii consumer characteristics the framework is formalized as a generalized least squares meta analysis in which the brand s price elasticity is the dependent variable several interesting results emerge from this analysis category specific factors brand specific factors and consumer demographics explain a significant amount of the variance in promotional response for a brand at both the primary and secondary demand levels category specific factors have greater influence on variability in promotional response and its decomposition than do brand specific factors there are several instances where exogenous variables do not affect total elasticities yet significantly affect individual components of total elasticity in fact the lack of a significant relationship between the variables and total elasticity is often due to offsetting effects within two or more of the three behavioral components of elasticity this is particularly true for brand specific factors which typically have no effect on total elasticity yet have important effects on the individual behaviors there is some evidence to suggest that not all promotion related increases in primary demand are due to forward buying in some cases promotions appear to increase consumption we use these results to illustrate how category and brand specific factors work to drive primary and secondary demand elasticities in different directions in short this paper offers an empirical generalization of a key finding on promotional response how elasticities decompose across brand choice purchase incidence and stockpiling and new insights into factors that explain variance in promotional response these findings are likely to be of interest to researchers who are concerned with theory development and the generalizability of marketing phenomena and to managers who plan promotion campaigns

multiple discreteness and product differentiation demand for carbonated soft drinks for several of the largest supermarket product categories such as carbonated soft drinks canned soups ready to eat cereals and cookies consumers regularly purchase assortments of products within the category consumers often purchase multiple products and multiple units of each alternative selected on a given trip this multiple discreteness violates the single unit purchase assumption of multinomial logit and probit models the misspecification of such demand models in categories exhibiting multiple discreteness would produce incorrect measures of consumer response to marketing mix variables in studying product strategy these models would lead to misleading managerial conclusions we use an alternative microeconomic model of demand for categories that exhibit the multiple discreteness problem recognizing the separation between the time of purchase and the time of consumption we model consumers purchasing bundles of goods in anticipation of a stream of consumption occasions before the next trip we apply the model to a panel of household purchases for carbonated soft drinks