on the statistical origins of the learning curve abstract this paper presents a statistical rationale for the existence of the learning curve phenomenon we consider a firm which allocates a fixed amount of input into several activities under uncertainty concerning the values of the parameters of the production function it is shown under fairly reasonable assumptions that if the firm learns about the parameters of the production function from previous observations of allocations and outputs then a learning curve phenomenon will emerge this result occurs since the estimates of the parameters become more precise over time and thus the allocation of the production factor into the various activities becomes more efficient i e closer to the optimum allocation that would have been determined if the parameters were known with certainty output therefore increases and inputs per unit of output decrease as a function of time and cumulative output and a learning curve emerges plateauing of the learning curve is discussed as are the conditions sufficient for the existence of this phenomenon for which the model presented herein is offered as a possible explanation

raising awareness and signaling quality to uninformed consumers a price advertising model the objective of this paper is to investigate the firm s optimal advertising and pricing strategies when introducing a new product we extend the existing signaling literature on advertising spending and price by constructing a model in which advertising is used both to raise awareness about the product and to signal its quality by comparing the complete information game and the incomplete information game we find that the high quality firm will reduce advertising spending and increase price from their respective complete information levels in the separating equilibrium the high quality firm will actually spend less on advertising than the low quality firm resulting in a negative correlation between product quality and advertising spending what sets our analysis apart from previous studies is that we consider advertising spending not only as a signaling device but also as an informational device when advertising spending is just a signaling device it is purely a dissipative expense it can be an effective signal of quality because only the high quality firm can afford it thus consumers can infer the product s quality by its advertising spending in this case advertising spending and product quality are positively correlated however when advertising also serves the purpose of raising awareness it endogenizes the size of the market for the firm so it is not just a dissipative expense any more consider the low quality firm s mimicking strategy in this case when the low quality firm is believed to be a highquality one it can charge a much higher price than if its true quality were known given that its marginal cost is lower than the high quality firm s its profit margin will be much larger in mimicry than in revealing its true quality indeed its profit margin will be even greater than the high quality firm s therefore the low quality firm in mimicry has a strong incentive to increase its advertising spending from its optimal level when its true quality is known to deter the low quality firm s mimicking tendency the high quality firm should decrease its advertising spending so that mimicry is not as appealing to the low quality firm as revealing its true quality indeed the high quality firm should reduce its advertising spending so much that it advertises less than the low quality firm in equilibriummany have interpreted signaling as burning money or throwing money down the drain in the case of advertising the claim is that its purpose is simply to show consumers that the firm can afford to squander money on advertising to signal its quality hence the advertising content need not be informative however our results show that simply burning money is not enough to signal quality how the money is burned is also important when advertising raises awareness as well as signals quality saving money rather than burning money is the correct signaling approach although ultimately the high quality firm will sacrifice some profit by reducing its market size the intuition behind this result is that when information is incomplete the high quality firm cannot fully exploit its advantages whenever its advantages in quality and or marginal costs are lessened a firm will want to spend less on advertising

common marketing agency as a device for facilitating collusion in a variety of markets firms voluntarily and independently delegate control over certain aspects of marketing to common agents in this article we present an explicit model of agency delegation where firms noncooperatively select agents name output prices and choose compensation schemes we exhibit an equilibrium in which all strategic variables not merely the marketing choices delegated to agents but prices as well are selected perfectly cooperatively this cooperative equilibrium is very simple and attractive each firm sets the collusive output price and employs a commission scheme to compensate the agent although each

anticipated protectionist policies real exchange rates and the current account the case of rigid wages abstract in this paper we develop a general equilibrium model of an economy with short run unemployment to analyze how anticipated protectionist policies affect real exchange rates the current account and aggregate employment we find that a key transmission channel is the change in current employment induced by future changes in tariffs we show that the direction and magnitude of this effect will depend on relative factor intensities and on real exchange rate behavior if a future tariff generated a current real exchange rate appreciation and if nontradables are labor intensive the anticipation of protectionist policies will generate an increase in current employment

intertemporal price speculation and the optimal current account deficit abstract the paper studies the effects of terms of trade fluctuations in an infinite horizon optimizing model of a small open economy while the current account response to a transitory terms of trade shock is in part explicable by intertemporal smoothing an important additional factor is the effect of anticipated future terms of trade shifts on the ral value of the external debt in terms of the home consumption basket when foreign borrowing is indexed to the import good a temporary worsening of the terms of trade creates the expectation of a decline in the real value of external debt this fall in the relevant real interest rate leads households to increase consumption while export prices are low and to decrease consumption sharply once the terms of trade recover if an adverse price shock is of sufficiently brief duration instantaneous utility will rise initially

customized advertising via a common media distributor we show that when a single media content distributor such as a television cable company or an internet provider delivers advertising messages on behalf of multiple competing brands it can sometimes utilize customized advertising to implement monopoly pricing even though such monopolistic pricing can be implemented with varying degrees of customization of commercials product revenues and consumer surplus are highest when the distributor chooses the highest level of customization feasible consumers would obviously prefer aggressive price competition in product markets however given that collusion on prices is facilitated anyway when the distributor acts as a common agent the welfare of consumers is enhanced when commercials are better aligned with their preferences

managing channel profits a channel of distribution consists of different channel members each having his own decision variables however each channel member s decisions do affect the other channel members profits and as a consequence actions a lack of coordination of these decisions can lead to undesirable consequences for example in the simple manufacturer retailer consumer channel uncoordinated and independent channel members decisions over margins result in a higher price paid by the consumer than if those decisions were coordinated in addition the ensuing suboptimal volume leads to lower profits for both the manufacturer and the retailer this paper explores the problems inherent in channel coordination we address the following questions what is the effect of channel coordination what causes a lack of coordination in the channel how difficult is it to achieve channel coordination what mechanisms exist which can achieve channel coordination what are the strengths and weaknesses of these mechanism what is the role of nonprice variables e g manufacturer advertising retailer shelf space in coordination does the lack of coordination affect normative implications from in store experimentation can quantity discounts be a coordination mechanism are some marketing practices actually disguised quantity discounts we review the literature and present a simple formulation illustrating the roots of the coordination problem we then derive the form of the quantity discount schedule that results in optimum channel profits this article was originally published in marketing science volume 2 issue 3 pages 239 272 in 1983

the effects of information transparency on suppliers manufacturers and consumers in online markets this paper looks into the effects of information transparency on market participants in an online trading environment we study these effects in business to business electronic markets with firms competing in both upstream and downstream industries the prior literature generally assumes that either the downstream firm buyer or the upstream firm seller is a monopoly it is not clear whether information transparency would still create value if both buyers and sellers face oligopolistic competition where the benefits of information transparency could be competed away to answer this question we first develop a simple two echelon e market model and then extend the model to more general settings we find that information transparency can create value for the overall e market yet it affects buyers and sellers very differently one side will be hurt depending on the competition mode cournot or bertrand in the downstream this suggests that a manufacturer owned a supplier owned and a neutral e market will have different preferences for information transparency finally we find that information transparency can hurt consumers when the downstream industry engages in bertrand competition this is a surprising result given the expectation that online markets create substantial value for consumers

trade taxes and the current account abstract we show that under some conditions a temporary import tariff improves the current account whereas a temporary export tax deteriorates it permanent import tariffs and export taxes have an identical although ambiguous effect on the current account

on credible delegation by oligopolists a discussion of distribution channel management several papers in the recent marketing literature have suggested that delegation in distribution e g the use of independent middlemen helps manufacturers to precommit strategically to profit enhancing competitive actions further the literature suggests that the profitability of such actions depends on market structure we challenge these conclusions here this is done in two steps first we perform an analysis of the entire class of models which have been used in the literature using internally consistent assumptions about market structure and contracting the only subgame perfect equilibrium is one in which all distribution channels have infinitely many levels of delegation obviously this is not what we see in the real world next we relax a key hidden assumption namely that all intra channel agreements are observable to competitors without this assumption the usual results unravel unless channel members can offer credible guarantees that unobservable agreements do not exist the strategic effects of delegation disappear since these guarantees are virtually impossible to maintain credibly we would expect to reject the hypothesis in the earlier literature relating channel structure to competition in an empirical study controlling for observability we conclude that mechanisms other than strategic ones must be responsible for the existence of delegated channels and make some suggestions about promising avenues for future theory research in channel structure

technological learning and renewable energy costs implications for us renewable energy policy abstract this paper analyzes the relationship between current renewable energy technology costs and cumulative production research development and demonstration expenditures and other institutional influences combining the theoretical framework of learning by doing and developments in learning by searching with the fields of organizational learning and institutional economics offers a complete methodological framework to examine the underlying capital cost trajectory when developing electricity cost estimates used in energy policy planning models sensitivities of the learning rates for global wind and solar photovoltaic technologies to changes in the model parameters are tested the implications of the results indicate that institutional policy instruments play an important role for these technologies to achieve cost reductions and further market adoption

strategic decentralization in channels the purpose of this paper is to understand the effect of strategic interaction on a manufacturer s channel structure decision in the model i analyze if there were no strategic interaction then the manufacturer would prefer vertical integration to decentralization with strategic interaction however decentralization can be a nash equilibrium strategy as mcguire and staein mcguire timothy richard staelin 1983a an industry equilibrium analysis of downstream vertical integration marketing sci 2spring 161 192 showed so the question arises what is it about strategic interaction that makes decentralization a nash equilibrium strategy the answer i give is that strategic interaction makes it possible for a manufacturer s retail demand curve to rise when he decentralizes i show that this raising of the demand curve on decentralization can happen only if one of the following mutually exclusive conditions is satisfied 1 the manufacturers products are demand substitutes at the retail level and strategic complements at the manufacturer or retailer levels 2 the manufacturer s products are demand complements at the retail level and strategic substitutes at the manufacturer or retailer levels strategic complementarity at the retailer manufacturer level means that if one retailer manufacturer raises his price then the other retailer manufacturer would raise his price as well strategic substitutability is just the opposite these results show that what is important for decentralization to occur is not how demand substitutable the two manufacturers products are as one might have thought from earlier works in the literature but rather the nature of coupling between demand dependence and strategic dependence

coordinating channels under price and nonprice competition this paper analyzes how manufacturers should coordinate distribution channels when retailers compete in price as well as important nonprice factors such as the provision of product information free repair faster check out or after sales service differentiation among retailers in price and nonprice service factors is a central feature of markets ranging from automobiles and appliances to gasoline and is especially observed in the coexistence of high service retailers and lower price discount retailers therefore how a manufacturer should manage retail differentiation is an important channel management question yet the approach in the existing literature has been to examine channel coordination under the standard symmetric contracting assumption that offering a uniform contract to all the retailers in a market will be sufficient for coordination i bring this assumption into question and ask when is it optimal for the manufacturer to use the channel contract to deliberately induce retail differentiation even if the retailers were ex ante identical in their cost and other characteristics the paper identifies the type of channel contracts that can endogenously induce symmetry as opposed to differentiation among retailers next the paper highlights a type of channel conflict that arises from the very nature of retail price service competition a manufacturer might find the retailers to be excessively biased towards price competition at the cost of service provision or vice versa the paper establishes when a manufacturer is likely to stimulate greater price as opposed to greater service competition among the retailers the framework that i develop to address these issues highlights the role of two basic types of consumer heterogeneity consumers are heterogeneous in their locations as in the spatial models of horizontal differentiation and in their willingness to pay for retail services as in the models of vertical differentiation the model also uses a natural relationship in retail markets between the travel time cost incurred by a consumer and her willingness to pay the more affluent consumers who have a higher willingness to pay for retail services also have a higher cost for their personal time given these market features the paper analyzes the problem faced by a manufacturer who sells to competing retailers the paper shows that the standard notion in the literature of offering similar contracts to all the retailers is sufficient only in markets with substantial locational differentiation relative to the differences in the willingness to pay effective channel management in these markets simply requires mechanisms that ensure that retailer interests are aligned so that they compete by offering a mix of price and service that is desirable from the manufacturer s point of view however in markets with small locational differentiation and substantial diversity in consumer willingness to pay the manufacturer s problem is not just to align retailer interests but to also use the channel contract to induce the correct level of retail differentiation this helps the manufacturer to better cater to the diversity in consumer willingness to pay and to prevent the cut throat competition that the retailers would otherwise have indulged in the manufacturer can achieve this through the use of menu based contracts menu based contracts induce differentiated retailer behavior despite the fact that the retailers are not forced into accepting different terms of trade this aspect can be useful in shielding manufacturers from litigation under the robinson patman act the paper also shows that for relatively high ticket items retailers tend to be excessively biased towards competing in the provision of retail services the correlation between consumer willingness to pay for service and travel costs implies that for high ticket products the competing retailers will focus on the more service sensitive customers at the cost of ignoring the price sensitive consumers in the market the manufacturer is therefore likely to encourage greater price competition among the retailers in contrast for low ticket items the manufacturer prefers to reduce price competition and encourage greater provision of services this provides an endogenous rationale for the use of price ceilings versus floors the basic model is also extended to consider the effect of upstream competition between manufacturers under upstream competition coordinating retail price and service decisions is not always optimal for an individual manufacturer this extension to manufacturer competition provides a basis for understanding the role of retail price service differentiation in the context of a channel duopoly it also shows that a mixed distribution channel a channel in which one manufacturer chooses to be coordinated while the other chooses to be noncoordinated can be an equilibrium in markets with weak brand loyalty

informative advertising with differentiated products in this paper we study the role of promotional expenditures by sellers in a model of product differentiation advertising conveys full and accurate information about the characteristics of products heterogeneous consumers who have no source of information other than advertisements seek to purchase the products that best fit their needs despite the roles played by advertising in improving the matching of products and consumers and in increasing the elasticity of demand faced by each firm we find that the market determined levels of advertising are excessive given the extent of diversity in the market we derive a promotional equilibrium based on a specific information transmission technology paying explicit attention to the structure of consumer information and its impact on firms demand curves this allows us to study the effects of changes in the advertising technology including an increased ability to target messages to specific groups of consumers on the equilibrium in the product market we find that decreased advertising costs may reduce profits by increasing the severity of price competition

negotiations and exclusivity contracts for advertising exclusive advertising on a given media outlet is usually profitable for an advertiser because consumers are less aware of competing products however for such arrangements to exist media must benefit as well we examine conditions under which such exclusive advertising contracts benefit both advertisers and media outlets referred to as stations by illustrating that exclusive equilibria arise in a theoretical model of the media advertisers and consumers who participate in both the product and media markets in the model stations sell advertising space to advertisers and broadcast advertising messages to consumers conditions leading to higher equilibrium levels of advertising can be unprofitable for advertisers because high levels of advertising make consumers better informed and thus lead to fiercer product price competition as a result media stations may be less profitable as well because their payoff is determined as a fraction of the advertiser surplus generated in the product market stations mitigate this effect by offering advertisers exclusive advertising contracts with such contracts consumers are less informed about competing products yielding higher producer surplus it is profitable for stations to offer exclusivity when commercial advertising is an important means for advertisers to inform consumers about their products

multiperiod resource allocation with variable technology planning the allocation of scarce resources to competing activities over multiple time periods is one of the most important problems facing decision makers in modern organizations much of the previous research in this area has concentrated on the use of linear programming procedures and has assumed that the technology through which scarce resource inputs are transformed into competing activity outputs is fixed a more realistic assumption in many situations is that certain technology coefficients are likely to vary over the planning horizon as a function of activity levels in previous periods in this paper a multiperiod resource allocation model with variable technology is formulated enriching a more traditional fixed technology model to include variable technology results in a nonlinear model which is more realistic but is also more difficult to solve a heuristic procedure that is both straightforward and intuitively appealing is developed for obtaining good feasible solutions to the variable technology model the solution procedure requires little additional computational effort beyond solving the associated less realistic fixed technology model

advertising in a distribution channel conventional wisdom suggests that one of the goals of manufacturer advertising is to reduce the cross price elasticity between products make one s own and rivals products appear to be less substitutable in the eyes of consumers conventional wisdom also suggests that all else being equal retailers will be able to obtain better terms of trade from manufacturers the more substitutable are the manufacturers products it follows that retailers should be opposed to advertising that has the effect of reducing cross price elasticities and thus that manufacturer advertising can be a source of channel conflict we show that these conventional wisdoms need not hold when only some consumers are exposed to the advertising messages using a hotelling model of demand we show that 1 manufacturers can be worse off from advertising that reduces the cross price elasticities between their products 2 channel conflict need not arise even when the sole purpose of advertising is to affect cross price elasticities and 3 depending on its bargaining power a retailer can be better off when the manufacturers products are perceived to be less substitutable

demand signalling and screening in channels of distribution this paper examines two ways channel members at the manufacturing and retail ends deal with asymmetric information in the context of new product introduction a manufacturer who has private information that demand for a new product will be high can differentiate itself from a manufacturer less confident of demand by undertaking high levels of pre launch advertising and offering a high wholesale price a retailer for its part can screen potentially high demand from potentially low demand products by stipulating a take it or leave it slotting allowance the assumption being that the offer will be accepted only by manufacturers confident of sufficient demand to recover the high initial cost of slotting allowances it is shown that manufacturers prefer to signal demand through advance advertising and wholesale price retailers to screen demand through slotting allowances it is shown that unless advance advertising is sufficiently effective slotting allowances yield higher total channel profits and higher social welfare

technological progress and optimal supply price abstract this article presents an analysis of the firm s optimal product price decision as a joint process with optimal production planning the production decision is formulated as a dynamic optimization problem over an infinite horizon under conditions of profit maximization and rational expectation given a set of market and technical progress information the problem is solved to obtain the time paths of shadow prices of capital and labor services these shadow prices of factors are combined to construct the time path of the optimal supply price sensitivity analysis are conducted on the optimal supply price to isolate the variational effects of technical progress and labor turnover rate the results are stated as propositions

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

channel coordination when retailers compete this paper explores channel coordination by a manufacturer that sells through competing retailers and that treats these retailers equally as required by the robinson patman act the authors show that in general there exists no single two part tariff with a constant per unit charge that will duplicate the behavioral results i e prices quantities and channel profits that are obtained by a vertically integrated system that is the channel cannot be coordinated except in the trivial cases of identical or noncompeting retailers however an appropriately specified quantity discount schedule will enable the channel to earn the same profits generated by a vertically integrated system conditions are derived under which a manufacturer will prefer to offer various two part tariffs with constant per unit charges instead of the channel coordinating quantity discount schedule the authors also establish the existence of a menu of two part tariffs that mimics all results of a vertically integrated system however only under stringent conditions will retailers select the appropriate tariff from the menu when these conditions are not satisfied the channel is worse off than in the case of a single second best tariff it is also demonstrated that under a wide range of parametric values the manufacturer will prefer to offer the second best two part tariff rather than a menu of two part tariffs that could maximize channel profits

an industry equilibrium analysis of downstream vertical integration this paper investigates the effect of product substitutability on nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer which may be either a franchised outlet or a factory store static linear demand and cost functions are assumed and a number of rules about players expectations of competitors behavior are examined it is found that for most specifications product substitutability does influence the equilibrium distribution structure for low degrees of substitutability each manufacturer will distribute its product through a company store for more highly competitive goods manufacturers will be more likely to use a decentralized distribution system this article was originally published in marketing science volume 2 issue 2 pages 161 191 in 1983

commentary managing channel profits channel coordination and more generally coordination of activities between interdependent economic agents is even more important today than when the paper was published more than 20 years ago one reason is the trend toward globalization and outsourcing caused in part by the development of increasingly complex products and services that integrate many different competencies coordination today involves all the aspects of the marketing mix product design coordination price and service coordination the focus of managing channel profits coordination of availability in highly hybrid distribution systems to better reach an increasingly complex and fragmented market and coordination of communication with the target market managing channel profits argues a tendency toward a lack of coordination without explicit institutional arrangements and coordination mechanisms such as quantity discounts and contracts to solve the problem the price and service coordination ideas of managing channel profits have been successfully applied for 25 years of developments in marketing of revenue and cost sharing arrangements between increasingly interdependent market participants

market rivalry and learning by doing abstract the failure to link learning by doing to its market effects and the complementary failure to consider market models in which competition extends to the search for cost efficiency can have unfortunate implications for economic policy this paper considers how the firm s equilibrium investment in learning arises in a two period oligopoly implications of these results for the manufacture of high technology products particularly by japanese semiconductor firms are developed

when good news about your rival is good for you the effect of third party information on the division of channel profits the internet has led to a large number of third party sources that offer high quality information about firms s products at little or no cost to consumers as a result many of these sources have grown in popularity extending well beyond the usual reach of traditional third parties such asconsumer reports andkelly s blue book for example the online version ofedmunds offers at no cost to consumers information about new products existing products long term tests and buyers guides all relating to the automotive industry avweb com delivers weekly aviation news and new product reviews to its readers and a large number of websites follow developments on computer platforms such as the apple macintosh in this paper we analyze how the provision of third party information affects the division of profits in a multiproduct distribution channel to illustrate consider the competition between microsoft and apple in the operating systems os market and their channel relationship to compusa a retailer that sells both macs and windows based pcs consider two pieces of thirdparty information first suppose that cnet an internet technology site reviews the newest upgrade of the macos and writes that the new user interface is even easier to use than previously second suppose that an article in the technology section of thewall street journal notes that changes in apple s networking support now enable macs to be better integrated into pc networks these two pieces of information are similar in the sense that they both express good news about the macos and thus they both can be expected to benefit apple by increasing consumer demand for macs one might also expect that in both cases compusa will capture some of the gains that come from the increased demand for macs and that microsoft will lose because the good news about the macos will induce some consumers to choose macs over windows based pcs however we will show that this intuition is incorrect the two reviews can have surprisingly different implications for the profits of microsoft and compusa the reason is that the two reviews differ on one crucial dimension the group of customers for whom they are primarily relevant the cnet review talks about improvements in the customer interface precisely what apple score consumers care about thewall street journal review talks about compatibility with prevailing pc standards important to consumers who care relatively more about compatibility and who are thus more likely to prefer windows apple snoncore consumers we show that good news about the macos that is more relevant to apple s core consumers the cnet review benefits microsoft but harms compusa while good news about the macos that is more relevant to apple s noncore consumers thewall street journal review has the opposite effect it harms microsoft but benefits compusa stated more generally our main result is that when third party information affects consumers product valuations the type of information that induces the change is critical to understanding which firms gain and which firms lose in particular depending on the type of third party information we find that 1 a retailer can be harmed by good news about a product that it carries 2 a manufacturer can gain from good news about a rival s product and 3 good news about a product category need not benefit all the manufacturers in that category there are three novel features of the analysis first we derive the equilibrium division of profit among firms when a retailer sells the products of competing manufacturers and we have done so while placing few restrictions on the feasible set of contracts second we show how this equilibrium division of profit lends itself to a simple graphical interpretation that depicts which firms gain and which firms lose from third party information third we provide a taxonomy of information types and identify the key features of each type that cause profit incentives to vary in particular we conceptualize information as having three components namely 1 the products to which the information pertains 2 whether the information is positive or negative and 3 the consumers to whom the information is relevant we show that all three information components play a role in determining the change in each firm s profit our framework can also be used to analyze a variety of other settings of interest for example it can be used to analyze profit incentives when the retailer has bargaining power when there is downstream competition and when there are non information based changes in consumers valuations in addition our framework may be used both to analyze the effects on profits of persuasive advertising and to predict advertising content

the entrepreneurship premium recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails it sometimes even shows an entrepreneurship discount this paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents the paper also shows that in an otherwise standard occupational choice setting the entrepreneurship premium rises with entrepreneurial scarcity and falls with their span of control finally liquidity constraints on startups raise the entrepreneurship premium by lowering the equilibrium wage

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

trade taxes and economic welfare abstract for a small country with no domestic distortions trade taxes are generally viewed as welfare reducing this note shows that in certain cases a temporary trade tax may raise welfare in the present although it must lower welfare over the entire planning horizon

comment managing channel profits comment in a recent paper in this journal jeuland and shugan jeuland a s shugan 1983 managing channel profits marketing sci 2 summer 239 272 proposed a quantity discount schedule as a way of coordinating a channel as they put it on p 253 of their paper a quantity discount schedule which would fix the retailer s and hence the manufacturer s profits to some fixed linear function of total channel profits would lead the channel to maximize profits the purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination

benefits of channel discord in the sale of durable goods minimizing strife through vertical integration is commonly seen as the holy grail for long term success in product distribution in this paper we take a different slant showing that sometimes a separated channel that embodies a degree of discord can be helpful particularly when a long term view is taken this result is shown in the context of durable goods manufacturing the quandary of durable goods production is that once demand for a certain time frame is met there is a subsequent temptation to flood the market with additional goods as such consumers are reluctant to buy immediately instead opting to wait for discounted prices this problem can be alleviated by a degree of channel discord high wholesale prices ensure future sales will slow to a trickle

an economic theory of vertical restraints vertical restraints imposed by manufacturers on the prices locations and sales of retail firms represent a puzzling departure from the simple price mediated exchange of conventional markets in this article we analyze the theoretical basis for these restraints in a setting where retailers inform consumers and are imperfectly competitive and where a manufacturer has some monopoly power we identify three potential externalities affecting retailers decisions these externalities lead to the failure of simple uniform price contracts to coordinate the incentives of retailers with the objective of maximizing combined manufacturer and retailer profits we identify the packages of vertical restraints that are minimally sufficient under various conditions to neutralize the externalities and to achieve the joint profit maximum

competition and cooperation in marketing channel choice theory and application this paper discusses the problem of choosing a vertical marketing channel in a product differentiated duopolistic market firms choose product price and the form of the marketing channel to maximize profits it is shown that integration of the marketing function results in greater price competition and lower prices than does the use of independent marketing middlemen the profitability of reducing price competition by using such middlemen is investigated two hypotheses that integration is negatively associated with the products substitutability and that symmetric channel structures are stable are tested in a preliminary way and supported with survey data from the international semiconductor industry