factor use and productivity change in the alcoholic beverage industries 1 introductiondemands for wine beer and spirits are in view of their substitutable nature often studied in conjunction with one another heien and pompelli 1989 nelson 1999 yet the alcoholic beverage industries are connected by similarities in their production processes and inputs as well as by the demand substitutability of their products lea and piggott 1995 these industries are therefore usefully examined together when questions about technical change and productivity growth arise little recent attention has been given to the nature of technical adjustments in the beer sector and no such work seems ever to have been published on wine and spirits 1brewing and distilling and to a smaller extent winemaking have become increasingly mechanized during the past half century as they have in most other manufacturing sectors packaging rates are higher shelf lives longer and storage and transportation technology improved tremblay 1987 elzinga 1990 pp 216 219 iserentant 1995 piggott and conner 1995 gisser 1999 the fixed costs associated with these innovations have broadly speaking served as an incentive to build fewer and larger plants industry concentration in the beer sector rose dramatically from the mid 1930s through the mid 1980s plant numbers then expanded as microbreweries catered to the new demand for product variety and idiosyncrasy although four firm concentration continued to rise through the mid 1990s in the spirits sector domiciled largely in the south distillery numbers continue to decline spurred by declining aggregate demand as well as scale economies no such broad consolidation is taking place in the wine industry where several california and new york firms long have occupied a substantial market share instead wineries numbers have grown rapidly and uninterruptedly since 1970 proliferating in regions long thought inhospitable to wine grape production growing consumer interest in wine variety and microclimates a trend similar to that for microbrews has abetted this diversification goodhue et al 2000 prices in the alcoholic beverage industries have in real terms fallen substantially in the past 40 years net prices to brewers have dropped 37 to wineries 16 and to distillers 31 at the same time real wage rates generally have risen and except for brief instability during the 1970s so have capital rental prices real material prices in all three sectors rose from the 1950s through the 1960s fell through the 1970s then recovered by the mid 1990s to their early 1970s levels relative factor prices in the beer industry broadly representative of those in the other two sectors are shown in figure 1 wage rates rose relative to both capital and material prices until 1980 thereafter wages fell relative to capital but continued to rise relative to material prices u s bureau of the census various years expenditure shares illustrated in figure 2 suggest that the beer industry is the most capital intensive of the three sectors by the mid 1990s capital expenditures represented one third of beer production costs compared to only one fifth of wine and distilling costs on the other hand raw materials constituted little more than half of beer expenses but nearly 70 of wine and distilling costs labor accounted for only 10 12 of expenditures in any of these industries figure 2 seems to suggest that at least since the mid 1970s or early 1980s capital has substituted for labor and materials in all three sectors yet as figure 1 reveals much of these share changes are accounted for by the rising relative price of capital the substantial narrowing of output input price margins in the alcoholic beverage sector suggests that the sector has become more cost efficient through either technical change scale economies improved utilization rates or other means technical changes themselves can alter potential scale economies and productive capacities and hence prospects for future variations in industry structure

sticky prices and monetary policy evidence from disaggregated us data this paper disentangles fluctuations in disaggregated prices due to macroeconomic and sectoral conditions using a factor augmented vector autoregression estimated on a large data set on the basis of this estimation we establish eight facts 1 macroeconomic shocks explain only about 15 of sectoral inflation fluctuations 2 the persistence of sectoral inflation is driven by macroeconomic factors 3 while disaggregated prices respond quickly to sector specific shocks their responses to aggregate shocks are small on impact and larger thereafter 4 most prices respond with a significant delay to identified monetary policy shocks and show little evidence of a price puzzle contrary to existing studies based on traditional vars 5 categories in which consumer prices fall the most following a monetary policy shock tend to be those in which quantities consumed fall the least 6 the observed dispersion in the reaction of producer prices is relatively well explained by the degree of market power 7 prices in sectors with volatile idiosyncratic shocks react rapidly to aggregate monetary policy shocks 8 the sector specific components of prices and quantities move in opposite directions

intertemporal pricing and price discrimination a semiparametric hedonic analysis of the personal computer market we apply a smooth coefficient semiparametric model to a unique high frequency data set to examine the intertemporal pricing of personal computers furthermore we test whether firms charge differential component prices for their top performance personal computers and whether premium firms charge both a premium for all their computers and a premium for their top performance ones we find nonlinear effects in the pricing of personal computer components we also find that firms in general do not charge differential prices for the components of their top performance computers in addition high quality firms charge higher premia only for their most advanced products copyright 2006 john wiley sons ltd

broadcast advertising and u s demand for alcoholic beverages quarterly data for 1977 1994 on alcohol consumption and advertising are used to estimate a differential demand system including explanatory variables for broadcast advertising and print advertising the model explains the growth rate of per capita consumption dependent on explanatory variables for prices real income demographic changes and real advertising by media and beverage empirical results also are reported for total consumption of pure alcohol the results for the three beverages and total alcohol indicate that advertising has little or no effect on demand the empirical evidence thus supports the notion that regardless of media advertising affects mainly brand shares

the demand for beer wine and spirits a survey of the literature the demand for alcohol literature is vast and much conflicting information about the nature of the demand for alcoholic beverages has been published this paper presents a survey of the literature and then uses the technique of meta regression analysis to establish insights into the nature of the demand for beer wine and spirits unlike previous meta studies of the demand for alcoholic beverages this study adjusts for the precision of each elasticity estimate the analysis presented suggests reported elasticity estimates will be influenced by such factors as estimation technique data frequency and time period under consideration with respect to time the findings suggest that the demand for alcoholic beverages has become less inelastic since the mid 1950s and that the income elasticity has been falling since the mid 1960s the analysis also found support for the idea that alcohol as a commodity group is a necessity and that consumers respond to price discounting with inventory behaviour rather than true substitution behaviour little support is found for the idea that the demand for alcoholic beverages varies fundamentally across most countries although wine may be an exception language en

the behavior of prices and inflation an empirical analysis of disaggregat price data this paper analyzes the effects of inflation on the dispersion of prices as well as other aspects of price behavior using disaggregated data on prices of foodstuffs in israel during 1978 84 we find that the effect of expected inflation on intramarket price variability is stronger than the effect of unexpected inflation we show that even in times of high inflation price quotations are not trivially short and price changes are not synchronized across firms these facts taken together confirm that there is some staggering in the setting of prices we find that the distribution of real prices is far from being uniform as many menu cost based models assume or conclude in fact as inflation increases to very high levels this distribution is not even symmetric when the annual inflation rate reaches 130 percent there are equal chances of finding real prices above or below the market average but upward deviations in the real price are further away from zero than downward ones furthermore as the annu

a comparative study of modelling the demand for food in the united states and the netherlands this paper provides time series and cross sectional budget survey analyses of the demand for food in the united states and the netherlands according to the tasks set by jan magnus and mary morgan mm various econometric methods including weighted least squares wls cointegration error correction the almost ideal demand system aids and time varying parameter tvp techniques are used and the estimated demand elasticities compared across country and over time 1997 john wiley sons ltd

rationally inattentive seller sales and discrete pricing prices tend to remain constant for a period of time and then jump in the literature this rigidity is usually interpreted to reflect a cost of adjusting prices this article shows that price rigidity can alternatively reflect optimal price setting when there are no adjustment costs namely if the seller is rationally inattentive the model generates non trivial pricing patterns that are consistent with the data and that are hard to explain with the traditional adjustment cost model in particular prices are adjusted frequently but move back and forth between a few given values hazard functions are downward sloping and responses to persistent shocks are sluggish these results are obtained in a model that implements rational inattention without simplifying assumptions on the functional forms of the processed signals

empirical implications of alternative models of firm dynamics abstract this paper considers two models of firm behavior that allow for heterogeneity among firms idiosyncratic or firm specific sources of uncertainty and discrete outcomes exit and or entry both the characteristics of firm level panel data sets and the nature of the questions we characteristically ask of them imply that models with these features are likely to underlie most detailed empirical work on microdata sets the models we consider are a bayesian learning model due to jovanovic 20 and a model of research and exploration due to ericson and pakes 11 the paper provides a simple set of empirical procedures to help determine which if either of these two models might be appropriate for alternative data sets we conclude by checking for the implications of the two models on an eight year panel of wisconsin firms the results indicate that one model is consistent with the data on manufacturing firms while the other is consistent with the data on retail trade journal of economic literature classification numbers c52 l60 l80

measuring global oil trade dependencies an application of the point wise mutual information method abstract oil trade is one of the most vital networks in the global economy in this paper we analyze the 1998 2012 oil trade networks using the point wise mutual information pmi method and determine the pairwise trade preferences and dependencies using examples of the usa s trade partners this research demonstrates the usefulness of the pmi method as an additional methodological tool to evaluate the outcomes from countries decisions to engage in preferred trading partners a positive pmi value indicates trade preference where trade is larger than would be expected for example in 2012 the usa imported 2 548 7 kbpd despite an expected 358 5 kbpd of oil from canada conversely a negative pmi value indicates trade dis preference where the amount of trade is smaller than what would be expected for example the 15 year average of annual pmi between saudi arabia and the u s a is 0 130 and between russia and the usa 1 596 we reflect the three primary reasons of discrepancies between actual and neutral model trade can be related to position price and politics the pmi can quantify the political success or failure of trade preferences and can more accurately account temporal variation of interdependencies

nonparametric estimation of the effects of advertising the case of lydia pinkham this article reexamines some of the issues raised subsequent to the classical research by palda 1964 we use a nonparametric estimation method that allows us to incorporate both seasonal and smoothness constraints to estimate the parameters of a demand function using monthly data on lydia pinkham s vegetable compound the analysis indicates that the parameters of the estimated demand equation are not constant throughout the long period of the data which covers the whole life cycle of the product

seasonality in dynamic regression models this paper examines the implications of treating seasonality as an unobserved component which changes slowly over time this approach simplifies the specification of dynamic relationships by separating non seasonal from seasonal factors we illustrate this approach using the consumption model of davidson et al 1978 and estimate a stable error correction model between consumption income and prices over the period 1958 92 more generally we argue that autoregressive models are unlikely to successfully model slowly changing seasonality and may confound seasonal effects with the dynamic responses of prime interest our approach can be used in a wide range of cases and we show that there is little loss in efficiency even if seasonality is deterministic

knowing what others know coordination motives in information acquisition we explore how optimal information choices change the predictions of strategic models when a large number of agents play a game with strategic complementarity information choices exhibit complementarity as well if an agent wants to do what others do they want to know what others know this makes heterogeneous beliefs di cult to sustain and may generate multiple equilibria in models with substitutability agents prefer to difierentiate their information choices we use these theoretical results to examine the role of information choice in recent price setting models and to propose modeling techniques that ensure equilibrium uniqueness

business cycle dynamics under rational inattention we develop a dynamic stochastic general equilibrium dsge model with rational inattention and compare its predictions to data households and decision makers in firms have limited attention and optimally allocate their attention rational inattention is the only source of slow adjustment the model matches the empirical impulse responses to monetary policy shocks and aggregate technology shocks at the same time profit losses and utility losses from inattention are very small furthermore it matters whether one uses this model or a conventional dsge model for policy analysis

recovering measures of advertising carryover from aggregate data the role of the firm s decision behavior data interval bias the biased estimation of advertising carryover in aggregate data can be viewed as a misinterpretation of the aggregate advertising sales relationship due to missing micro advertising data this paper argues that if the researcher does not explicitly model the firm s advertising decisions he will incorrectly interpolate the missing data and thereby allow the firm s decision behavior to influence inferences about advertising carryover drawing upon a general model of advertising decision behavior the expected aggregate form of the koyck relationship is developed and compared to existing bias correction methodologies although it is difficult to find any parsimonious procedure which is robust with respect to all types of decision behavior allowing lagged advertising to enter the classical koyck equation emerges as a simple method of obtaining a reasonable estimate of advertising carryover in aggregate data

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

a micromodeling approach to investigate the advertising sales relationship the purpose of this paper is to derive a model of advertising effects on the firm s sales a micromodel is postulated and aggregated across individuals and over time to produce a macromodel of the aggregate sales advertising relationship for a single product the micromodel postulated is very simple it incorporates two factors reach of the ads and rate of decay of their effectiveness over time this approach to modeling advertising effects is shown to be fruitful in several respects 1 the coefficients of the aggregate equation are easily interpretable in terms of the reach and decay parameters 2 the model derived is nonlinear yet estimable 3 a special case of the model is very similar to lag models that have been in use 4 the model can be used whatever the unit of time is 5 the carryover effect of advertising as commonly defined is not constant but depends upon the previous spending levels and 6 the model helps illustrate that the duration of advertising may be greatly overstated if aggregate lagged dependent variable models are simplistically interpreted

costly information planning complementarities and the phillips curve sticky information models capture the sluggish response of aggregate prices to monetary shocks but fail to match the magnitude and frequency of price changes at the microlevel this paper shows that accounting for the endogenous decision of when to acquire new information about different shocks can help overcome this shortcoming in the calibrated model prices change frequently and by large amounts in response to idiosyncratic shocks but sluggishly to monetary shocks the paper also highlights that many predictions of the sticky information and rational inattention models are the same and thus robust to different specifications of information processing costs

competition transmission and pattern evolution a network analysis of global oil trade abstract this paper studies the competition among oil importers using complex network theory combined with several alternative measures of competition intensity to analyze the evolution of the pattern and transmission of oil trading competition the results indicate that oil trade has formed a global competition pattern and that the role played by the asian pacific region in the evolution of this competition pattern is becoming increasingly prominent in addition global competition intensity has continued to rise and non oecd countries have become the main driving force for this increase in global competition intensity the large oil importers are the most significant parts of the global oil trading competition pattern they are not only the major participants in the competition for oil resources but also play important roles in the transmission of oil trading competition china and the united states especially display the feature of globalization whose impacts of transmission reach across the whole oil trading competition network finally a 5c changeability contestability cooperation commitment and circumstances policy framework is put forward to maintain the stability of oil trade and improve the energy security of oil importers in various aspects

information rigidity and the expectations formation process a simple framework and new facts we propose a new approach to test the full information rational expectations hypothesis which can identify whether rejections of the null arise from irrationality or limited information this approach quantifies the economic significance of departures from the null by quantifying the underlying degree of information rigidity applying this approach to u s and international data of professional forecasters and other agents yields pervasive evidence consistent with models of imperfect information furthermore the proposed approach sheds new light on policies such as inflation targeting and those leading to the great moderation affecting expectations finally we document evidence of state dependence in the expectations formation process

the structure of third world economic interdependence empirical studies of interdependence have mainly focused on whether interdependence has been increasing or declining on a world scale in this research note i examine the nature of economic interdependence in the less developed countries ldcs the main question that i address is whether ldcs are more economically dependent in the sense of being more deeply involved in economic interdependence relationships than developed countries dcs richard cooper and edward morse have argued that economic interdependence is associated with increased industrialization and modernization implying that ldcs are less involved than dcs in interdependence relationships empirical evidence presented here suggests that ldcs are in fact more dependent than dcs

menu costs and phillips curves this paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation sellers can change price only by incurring a real menu cost we calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new u s data set of individual prices due to klenow and kryvtsov the prediction of the calibrated model for the effects of high inflation on the frequency of price changes accords well with international evidence from various studies the model is also used to conduct numerical experiments on the economy s response to various shocks in none of the simulations we conducted did monetary shocks induce large or persistent real responses

modeling response to advertising and pricing changes for v 8 cocktail vegetable juice this paper is based on a series of studies undertaken for v 8 cocktail vegetable juice over a five year period the studies were a consequence of management questions regarding the effectiveness of a new advertising campaign the best media mix for this campaign and the apparent wear out of the advertising copy the studies included controlled experimentation estimation of advertising response functions and exploration of price sensitivity following major price increases by v 8 it was found that the short term response to advertising was s shaped and that the new creative approach rather than expenditure levels alone accounted for by far the largest component of the impact of advertising on sales it was also found that for a short period following the major price increases v 8 became extremely price sensitive however after about six months the marginal impact of price returned to historical levels the application of results at campbell soup company their relationship to the literature and their implications for both researchers and practitioners are discussed

the red queen in action the longitudinal effects of capital investments in the mobile telecommunications sector organizations undertake capital investments in technology to generate revenues or decrease costs and thereby enhance profitability however red queen type responses by competing organizations in the form of rapid imitation and escalating of technology investments erode the ability of the investing organizations to sustain gains in profitability productivity gains from these investments may persist but they may not translate into sustained profitability gains owing to declining prices brought about by a hypercompetitive environment the emergence and erosion of benefits attributable to capital investments is examined by decomposing profitability into productivity price recovery product mix and capacity utilization and by regressing each performance measure on past technology investments a polynomial distributed lag model is estimated with quarterly data for 30 firms in the mobile telecommunications services sector from 1996 to 2005 the results indicate that capital investments are positively associated with productivity of current and future periods and their association with profitability is only positive in the future after six quarters these results highlight a unique outcome of the red queen hypothesis simply by imitating learning and investing in technology due to competition is beneficial to all firms in the industry

sticky information and sticky prices abstract in the u s and europe prices change at least once a year yet nominal macro shocks seem to have real effects lasting well beyond a year sticky information models as posited by mankiw and reis 2002 sticky information versus sticky prices a proposal to replace the new keynesian phillips curve quarterly journal of economics 117 1295 1328 sims 2003 implications of rational inattention journal of monetary economics 50 3 665 690 and woodford 2003 princeton university press princeton nj can reconcile micro flexibility with macro rigidity we simulate a sticky information model in which price setters update information on macro shocks less frequently than information on micro shocks we then examine price changes in the micro data underlying the u s cpi empirical price changes react to old information just as sticky information models predict

the persistence of marketing effects on sales are marketing efforts able to affect long term trends in sales or other performance measures answering this question is essential for the creation of marketing strategies that deliver a sustainable competitive advantage this paper introduces persistence modeling to derive long term marketing effectiveness from time series observations on sales and marketing expenditures first we use unit root tests to determine whether sales are stable or evolving trending over time if they are evolving we examine how strong this evolution is univariate persistence and to what extent it can be related to marketing activity multivariate persistence an empirical example on sales and media spending for a chain of home improvement stores reveals that some but not all advertising has strong trend setting effects on sales we argue that traditional modeling approaches would not pick up these effects and therefore seriously underestimate the long term effectiveness of advertising the paper concludes with an agenda for future empirical research on long run marketing effectiveness

bricks and mortar vs clicks and mortar an equilibrium analysis abstract the internet has provided traditional retailers a new means with which to serve customers consequently many bricks and mortar retailers have transformed to clicks and mortar by incorporating internet sales examples of companies making such a transition include best buy wal mart barnes noble etc despite the increasing prevalence of this practice several fundamental questions remain 1 does it pay off to go online 2 which is the equilibrium industry structure 3 what is the implication of this business model for consumers we study these issues in an oligopoly setting and show that clicks and mortar arises as the equilibrium channel structure however we find that this equilibrium does not necessarily imply higher profits for the firms in some cases rather it emerges as a strategic necessity consumers are generally better off with clicks and mortar retailers if firms align with pure e tailers to reach the online market we show that a prisoner s dilemma type equilibrium may arise

a supply chain model with direct and retail channels abstract we study a dual channel supply chain in which a manufacturer sells to a retailer as well as to consumers directly consumers choose the purchase channel based on price and service qualities the manufacturer decides the price of the direct channel and the retailer decides both price and order quantity we develop conditions under which the manufacturer and the retailer share the market in equilibrium we show that the difference in marginal costs of the two channels plays an important role in determining the existence of dual channels in equilibrium we also show that demand variability has a major influence on the equilibrium prices and on the manufacturer s motivation for opening a direct channel in the case that the manufacturer and the retailer coordinate and follow a centralized decision maker we show that adding a direct channel will increase the overall profit our numerical results show that an increase in retailer s service quality may increase the manufacturer s profit in dual channel and a larger range of consumer service sensitivity may benefit both parties in the dual channel our results suggest that the manufacturer is likely to be better off in the dual channel than in the single channel when the retailer s marginal cost is high and the wholesale price consumer valuation and the demand variability are low

analysis of oil export dependency of mena countries drivers trends and prospects abstract the purpose of this paper is to analyse how oil export dependencies of middle east and north african mena oil producers have evolved over the past two decades and to identify the main driving factors from an energy policy perspective the paper expresses the oil export dependency of each economy in terms of a multiplicative identity that captures effective export price export to primary oil supply ratio oil dependency and oil export intensity of the country using the data for 1980 2006 the evolution in these factors is investigated for seven mena countries and the influence of the above factors is decomposed using the laspeyres index the analysis shows that energy price and increasing energy intensity in the mena countries have influenced the overall oil export dependency reducing the energy intensity can improve oil export revenue share to gdp by 5 10 in most of the countries while iran can gain significantly by increasing its export volume

a strategic analysis of dual channel supply chain design with price and delivery lead time considerations abstract this paper extends the work of chiang et al 2003 by investigating how price and delivery lead time decisions affect channel configuration strategy under either the manufacturer owned or the decentralized mode we show the choice of channel structure depends on customer acceptance of the online channel and the cost parameters following a threshold policy in both forms of ownership we prove that the strategic use of direct marketing to mitigate the double marginalization the major finding in chiang et al 2003 still holds even in this general situation moreover pareto zone exists where both manufacturer and retailer outperform their counterparts in the traditional indirect channel only case thus indicating that mitigating double marginalization may bring mutual benefits we also compare pricing and delivery lead time decisions between different forms of ownership or between different channel structures under the same form of ownership the manufacturer adopts a slow down deliver later approach and speeds up delivery to serve customers with a higher sensitivity to delivery lead time when he owns the whole indirect channel but chooses to stay fast and brag about better services and surprisingly slows down the speed of service when customers are more sensitive to delivery lead time due to the internal competition between two channels in the decentralized mode

intertemporal aggregation of heterogeneous consumers abstract this paper deals with a relatively unexamined facet of stochastic brand switching models their connection to market share models we derive a composite market share model based on aggregation of heterogeneous markovian type individuals each purchasing a brand from the product class several times during the period of analysis the characteristics of this composite model are examined and interestingly suggest a markov type market share model moreover this examination sheds some light on a phenomenon uncovered in econometric studies of market share response to advertising the slow decay of the lagged market share term as the length of the measurement period is increased

the length of the effect of aggregate advertising on aggregate consumption abstract we investigate the longevity of aggregate advertising effects on aggregate consumption over the period 1947 1988 using updated methods the effects appear to linger for nine years raising further questions perhaps a return to this near dormant area of research could be productive

semiparametric analysis to estimate the deal effect curve abstract the marketing literature suggests several phenomena that may contribute to the nature of the relationship between sales and price discounts these phenomena can produce complex nonlinearities and interactions in the deal effect curve that are best captured with a flexible approach because a fully nonparametric regression model suffers from the curse of dimensionality the authors propose a semiparametric regression model store level sales over time are modeled as a nonparametric function of own and cross item price discounts and a parametric function of other predictors the authors compare the predictive validity of the semiparametric model with that of two parametric benchmark models and obtain superior performance the results for three product categories indicate threshold and saturation effects for both ownand cross item temporary price cuts the authors also find that the nature of the own item curve depends on other items price discounts comparisons with restricted model specification

cointegration analysis of the advertising sales relationship the examination of stochastic properties of the annual advertising and sales data from the lydia pinkham company reveals that the series are cointegrated and therefore possess a long run equilibrium condition according to the estimates of the error correction model of the series in the short run advertising is found to be more responsive than sales in adjustments to eliminate departures from the long run equilibrium condition the author s analysis in general implies that the observed business firms decision rules fixing advertising spending as a percentage of sales revenue may hold as a long run equilibrium condition copyright 1991 by blackwell publishing ltd

pricing and lead time decisions in decentralized supply chains this paper studies a decentralized supply chain consisting of a supplier and a retailer facing price and lead time sensitive demands a stackelberg game is constructed to analyze the price and lead time decisions by the supplier as the leader and the retailer as the follower the equilibrium strategies of the two players are obtained using the performance of the corresponding centralized system as a benchmark we show that decentralized decisions in general are inefficient and lead to inferior performance due to the double marginalization effect however further analysis shows that the decision inefficiency is strongly influenced by market and operational factors and if the operational factors are dominating it may not be significant this shows that before pursuing a coordination strategy with retailers a supplier should first improve his or her own internal operations

a meta analysis of marketing communication carryover effects abstractto optimally set marketing communication marcom budgets reliable estimates of short term elasticities and carryover effects are required empirical generalizations from meta analyses of prior field studies can help guide these decisions however the last such meta analysis of marcom carryover effects was performed on koyck model based estimates collected before 1984 and was confined to mass media advertising the authors update and extend extant empirical generalizations via two meta analyses of carryover estimates compiled from studies encompassing personal selling targeted advertising and mass media advertising using diverse model forms until 2015 the first is focused on and utilizes 918 estimates of the carryover proportion of the total effect termed long term share of the total effect and the second focuses on 863 derivable estimates of 90 implied duration intervals the authors find the mean long term shares of the total effect for personal selling 687 and targeted advertisin

demand for differentiated products price and advertising evidence from the u s beer market abstract this paper employs a nation wide sample of supermarket scanner data to estimate a large brand level demand system for beer in the u s using the distance metric method of pinkse slade and brett pinkse j slade m brett c 2002 spatial price competition a semiparametric approach econometrica 70 1111 1155 unlike previous studies this work estimates the own and cross advertising elasticities in addition to price elasticities positive and negative cross advertising elasticities imply the presence of both cooperative and predatory effects of advertising expenditures across brands however the former effect appears to dominate suggesting that advertising increases the overall demand for beer we discuss the implications of these results in this industry

informative advertising in differentiated oligopoly markets abstract this paper examines the welfare implications of informative advertising in differentiated product oligopoly markets the analysis reconciles the conflicting results in previous studies that find advertising to be undersupplied in homogeneous product markets but oversupplied in differentiated product markets when the degree of differentiation is small in equilibrium purely informative advertising is undersupplied when brands are sufficiently close substitutes and oversupplied when brands are more differentiated product differentiation also has welfare implications for the effect of technological change in the advertising sector in response to an advertising cost innovation equilibrium prices fall and the market converges to the socially optimal resource allocation for brands that are sufficiently close substitutes whereas equilibrium prices rise and divergence occurs when brands are more differentiated

product availability in competitive and cooperative dual channel distribution with stock out based substitution abstract this paper investigates the impact of customers stock out based substitution on the product availability and the channel efficiency of a dual channel supply chain which consists of a supplier distributing a single product to customers through both its wholly owned direct channel and an independent retailer the supplier and its retailer with the objective of optimizing their own profit simultaneously choose their own base stock level to satisfy the stochastic demand from the customers whose channel preferences are heterogeneous and may be affected by each channel s product availability the customers dynamically substitute between the two channels in the event of a stock out the result shows that the effect of the stock out based substitution may increase or decrease the efficiency of a decentralized supply chain it is found that while the integrated supplier retailer may consolidate the base stock levels to benefit from stock out based substitution the independent supplier and retailer are more inattentive to customers stock out based substitution thus the competitive base stock levels of the decentralized dual channel supply chain rarely agree with the system optimal levels various contracts are examined to shed light on channel coordination mechanisms in addition it is shown that the channel efficiency of the dual channel distribution can be improved by the emergence of stackelberg leadership from either the supplier or the retailer

generalizing what is known about temporal aggregation and advertising carryover this paper provides a theoretical explanation for the inconsistent findings from previous econometric analyses of aggregated data concerning the duration of advertising carryover using this theoretical explanation and the knowledge of a data interval bias the paper reviews and summarizes the empirical work in the area of sales response modeling and then after adjusting for aggregation bias presents support for an empirical generalization that the average advertising duration interval is of brief duration typically between six and nine months

direct marketing indirect profits a strategic analysis of dual channel supply chain design the advent of e commerce has prompted many manufacturers to redesign their traditional channel structures by engaging in direct sales the model conceptualizes the impact of customer acceptance of a direct channel the degree to which customers accept a direct channel as a substitute for shopping at a traditional store on supply chain design the customer acceptance of a direct channel can be strong enough that an indepent manufacturer would open a direct channel to compete with its own retailers here direct marketing is used for strategic channel control purposes even though it is inefficient on its own and surprisingly it can profit the manufacturer even when so direct sales occur specifically we construct a price setting game between a manufacturer and its independent retailer direct marketing which indirectly increases the flow of profits through the retail channel helps the manufacturer improve overall profitability by reducing the degree of inefficient price double marginalization while operated by the manufacturer to constrain the retailer s pricing behavior the direct channel may not always be detrimental to the retailer because it will be accompanied by a wholesale price reduction this combination of manufacturer pull and push can benefit the retailer in equilibrium finally we show that the mere threat of introducing the direct channel can increase the manufacturer s negotiated share of cooperative profits even if price efficiency is obtained by using other business practices

sectoral price data and models of price setting in the median sector 100 percent of the long run response of the sectoral price index to a sector specific shock occurs in the month of the shock the standard calvo model and the standard sticky information model can match this finding only under extreme assumptions concerning the profit maximizing price the rational inattention model of mackowiak and wiederholt 2009a optimal sticky prices under rational inattention american economic review 99 769 803 can match this finding without an extreme assumption concerning the profit maximizing price furthermore there is little variation across sectors in the speed of response of sectoral price indexes to sector specific shocks the rational inattention model matches this finding while the calvo model predicts too much cross sectional variation

testing the sticky information phillips curve abstract i consider the empirical evidence for the sticky information model relative to the basic sticky price model conditional on historical measures of inflation forecasts the estimated structural parameters are inconsistent with an underlying sticky information model and the sticky information phillips curve is statistically dominated by the new keynesian phillips curve i find that the poor performance of the sticky information approach is driven by two key elements first the sticky information model underestimates inflation in the 1970s and overestimates inflation since the 1980s second predicted inflation from the sticky information model is excessively smooth

carryover effects and temporal aggregation in a partial adjustment model framework this paper discusses the impact of aggregating time series observations on the specification of an econometric model in the framework of a familiar sales response model temporally aggregated specifications are derived it is illustrated that different aggregation schemes provide different models each of them having appealing characteristics furthermore the derived specifications illustrate that frequently calibrated models are misspecified and as such provide biased estimates which significantly affect the interpretation of the results some suggestions are provided for estimating the exact specifications in such a way that the obtained parameter estimates provide correct insights into the underlying response process

further results on aggregation of differential demand equations barnett 1979a 1981 theil s extending 1971 work aggregates differential demand equations in absolute undeflated prices this paper extends further these results by deriving aggregate macro demand equations in relative prices under stated assumptions these equations are analogous to the individual consumer s micro demand equations and the properties of the microcoefricients carry over

productivity analysis of u s manufacturing using a stochastic coefficients production function in this article we show that the production aggregation and estimation theories that lead to a stochastic coefficients production function are more general than those leading to a fixed coefficients production function estimates of productivity changes implied by these two types of cobb douglas production functions are compared for several u s manufacturing sectors for the period 1955 1982 all of the estimates of the stochastic coefficients cobb douglas function have the right algebraic sign for all industries considered whereas some of the estimates of its fixed coefficients counterpart have the wrong sign

estimating micro relationships from macro data a comparative study of two approximations of the brand loyal model under temporal aggregation the data interval bias issue in econometric studies of the relationship between advertising and sales first was discussed in jmr by clarke in 1976 within the last few years several studies report

how dynamic consumer response competitor response company support and company inertia shape long term marketing effectiveness long term marketing effectiveness is a high priority research topic for managers and emerges from the complex interplay among dynamic reactions of several market players this paper introduces restricted policy simulations to distinguish four dynamic forces consumer response competitor response company inertia and company support a rich marketing dataset allows the analysis of price display feature advertising and product line extensions the first finding is that consumer response differs significantly from the net effectiveness of product line extensions price feature and advertising in particular net sales effects are up to five times stronger and longer lasting than consumer response second this difference is not due to competitor response but to company action for tactical actions price and feature it takes the form of inertia as promotions last for several weeks for strategic actions advertising and product line extensions support by other marketing instruments greatly enhances dynamic consumer response this company action negates the postpromotion dip in consumer response and enhances the long term sales benefits of product line extensions feature and advertising therefore managers are urged to evaluate company decision rules for inertia and support when assessing long term marketing effectiveness

state dependent or time dependent pricing does it matter for recent u s inflation in the 1988 2004 micro data collected by the u s bureau of labor statistics for the cpi price changes are frequent every 4 7 months depending on the treatment of sale prices and large in absolute value on the order of 10 the size and timing of price changes varies considerably for a given item but the size and probability of a price change are unrelated to the time since the last price change movements in aggregate inflation reflect movements in the size of price changes rather than the fraction of items changing price due to offsetting movements in the fraction of price increases and decreases neither leading time dependent models taylor or calvo nor 1 st generation state dependent models match all of these facts some 2 nd generation state dependent models however appear broadly consistent with the empirical patterns

alcohol consumption and alcohol advertising bans the purpose of this paper is to empirically examine the relationship between alcohol advertising bans and alcohol consumption most prior studies have found no effect of advertising on total alcohol consumption a simple economic model is provided which explains these prior results the data set used in this study is a pooled time series of data from 20 countries over 26 years the empirical model is a simultaneous equations system which treats both alcohol consumption and alcohol advertising bans as endogenous the primary conclusions of this study are that alcohol advertising bans decrease alcohol consumption and that alcohol consumption has a positive effect on the legislation of advertising bans the results indicate that an increase of one ban could reduce alcohol consumption by 5 to 8 the alcohol price elasticity is estimated at about 0 2 the results suggest that recent exogenous decreases in alcohol consumption will decrease the probability of enactment of new bans and undermine the continuance

introduction to the special issue empirical generalizations in marketing it is our hope that some of the empirical generalizations presented in this volume would be of practical value to management some of the generalizations help codify our knowledge they are discussed in several papers some can serve as useful guidelines in the generation of strategic marketing options in addition we hope that this volume would stimulate additional research and actions by marketing scientists in industry and academia

price and lead time decisions in dual channel supply chains abstract manufacturers today are increasingly adopting a dual channel to sell their products i e the traditional retail channel and an online direct channel empirical studies have shown that service quality we focus on the delivery lead time of the direct channel even goes beyond product price as one of the major factors influencing consumer acceptance of the direct channel delivery lead time has significant effects on demand profit and pricing strategy however there is scant literature addressing the decision on the promised delivery lead time of a direct channel and its impact on the manufacturer s and retailer s pricing decisions to fill this gap we examine the optimal decisions of delivery lead time and prices in a centralized and a decentralized dual channel supply chain using the two stage optimization technique and stackelberg game and analyze the impacts of delivery lead time and customer acceptance of a direct channel on the manufacturer s and retailer s pricing behaviours we analytically show that delivery lead time strongly influences the manufacturer s and the retailer s pricing strategies and profits our numerical studies reveal that the difference between the demand transfer ratios in the two channels with respect to delivery lead time and direct sale price customer acceptance of the direct channel and product type have great effects on the lead time and pricing decisions

optimal price setting with observation and menu costs we study the price setting problem of a firm in the presence of both observation and menu costs in this problem the firm optimally decides when to collect costly information on the adequacy of its price an activity which we refer to as a price review upon each review the firm chooses whether to adjust its price subject to a menu cost and when to conduct the next price review this behavior is consistent with recent survey evidence documenting that firms revise prices infrequently and that only a few price revisions yield a price adjustment the goal of the paper is to study how the firm s choices map into several observable statistics depending on the level and relative magnitude of the observation vs the menu cost the observable statistics are the frequency of price reviews the frequency of price adjustments the size distribution of price adjustments and the shape of the hazard rate of price adjustments we provide an analytical characterization of the firm s decisions and a mapping from the structural parameters to the observable statistics we compare these statistics with the ones obtained for the models with only one type of cost the predictions of the model can with suitable data be used to quantify the importance of the menu cost vs the information cost we also consider a version of the model where several price adjustment are allowed between observations a form of price plans or indexation we find that no indexation is optimal for small inflation rates

promotion and fast food demand many believe that fast food promotion is a significant cause of the obesity epidemic in north america industry members argue that promotion only reallocates brand shares and does not increase overall demand we study the effect of fast food promotion on market share and total demand by estimating a discrete continuous model of fast food restaurant choice and food expenditure that explicitly accounts for both spatial and temporal determinants of demand estimates are obtained using a unique panel of canadian fast food consumers the results show that promotion primarily increases demand and has a smaller effect on restaurant market shares

temporal aggregation the data interval bias and empirical estimation of bimonthly relations from annual data in an important study reviewing the literature on econometric studies of the relationship between advertising and sales clarke clarke darral g 1976 econometric measurement of the duration of advertising effects on sales j marketing res 13 november 345 357 concluded that the implied duration interval of the effects of advertising on sales were too long when the studies used annual data a theoretical explanation is provided here for the observation of parameter estimates which vary with the data interval employed in the analysis parameter estimates are developed on the basis of data aggregated at various levels of temporal aggregation and compared with theoretical values it is demonstrated that it is possible to recover bimonthly parameters when only annual data are available

quantifying the sustainability of economic resource networks an ecological information based approach abstract sustainability as a concept has multiple disparate perspectives stemming from different related disciplines which either maintain ambiguous interpretations or concentrate on metrics pertaining to single aspects of a system given the embedded multi dimensionality of sustainability systemic approaches are needed that can cope with interactions of different dimensions past efforts for measuring sustainability holistically have taken an accounting approach based on the availability and efficiency of resource flows however an accounting approach fails to fully incorporate the intensive parameters pertaining to sustainability an ecological information based approach is a promising holistic measurement which incorporates both intensive and extensive dimensions of sustainability this paper evaluates this approach by applying it to six economic resource trade flow networks virtual water oil world commodity oecd bric commodity oecd bric foreign direct investment and iron and steel from the perspective of biomimicry it appears that these networks can achieve higher levels of efficiency without weakening their robustness to resource delivery the trends of measured efficiency and redundancy of the studied networks are demonstrated to be useful in reflecting long term changes while the trend in robustness levels were found to exhibit similar behavior to an ecosystem in its early phase of development

promised delivery time and capacity games in time based competition we investigate firms competitive behaviors in industries where customers are sensitive to both promised delivery time pdt and quality of service qos measured by the on time delivery rate to study the competition in pdt at the marketing level we construct an oligopoly game with an external qos requirement we show that there exists a unique nash equilibrium and the equilibrium qos exhibits a switching surface structure with respect to capacities to study the competition in capacity at the strategic level we construct a two stage game in which the firms compete in terms of their capacities in stage 1 and in terms of pdt in stage 2 we show the existence of two different types of pure strategy equilibria and characterize them this study provides the following insights an index of time based competitive advantage itca and the first mover advantage determine the positions of the firms in time based competition either the well known prisoner s dilemma or off equilibrium behaviors due to different preferences for equilibria when multiple equilibria exist may lead the firms to overinvest in capacity but no one may gain a competitive advantage a uniform improvement in internal efficiency i e a uniform capacity cost reduction may harm everyone quality differentiation i e going beyond the qos benchmark plays a dual role in time based competition either helping a firm with a larger itca to compete more effectively or helping a firm possibly with a smaller itca to preempt competitors and protect its market advantage this paper was accepted by paul h zipkin operations and supply chain management

chapter 9 econometric and time series market response models publisher summary marketing has seen a rapid expansion in the widespread use of quantitative methods correlation and regression analysis were among the first techniques used as marketing research emerged as a discipline after world war ii in the early 1970s regression analysis became econometrics simultaneous equation systems could be estimated almost as easily as single regression equations while econometrics as a whole continues to flourish as new and more sophisticated estimation techniques and associated computer software have become available simultaneous equation systems have not become widely prevalent the dynamic structure of marketing variables themselves is addressed in the chapter followed by discussions of leads and lags among marketing variables and the assessment of the direction of causality dynamic properties of sales response functions have been discussed in more detail marketing generalizations that have been uncovered as well as empirical evidence on the shape of the sales response function is reported

wearout effects of different advertising themes a dynamic bayesian model of the advertising sales relationship models of advertising response implicitly assume that the entire advertising budget is spent on disseminating one message in practice managers use different themes of advertising for example price advertisements versus product advertisements and within each theme they employ different versions of an advertisement in this study we evaluate the dynamic effects of different themes of advertising that have been employed in a campaign we develop a model that jointly considers the effects of wearout as well as that of forgetting in the context of an advertising campaign that employs five different advertising themes we quantify the differential wearout effects across the different themes of advertising and examine the interaction effects between the different themes using a bayesian dynamic linear model dlm such a response model can help managers decide on the optimal allocation of resources across the portfolio of ads as well as better manage their scheduling we develop a model to show how our response model parameters can be used to improve the effectiveness of advertising budget allocation across different themes we find that a reallocation of resources across different themes according to our model results in a significant improvement in demand

introduction of a second channel implications for pricing and profits in this paper we study the optimal pricing strategies when a product is sold on two channels such as the internet and a traditional channel we assume a stylized deterministic demand model where the demand on a channel depends on prices degree of substitution across channels and the overall market potential we first study four prevalent pricing strategies which differ in the degree of autonomy for the internet channel for a monopoly we provide theoretical bounds for these pricing strategies we also analyze the duopoly case where an incumbent mixed retailer faces competition with a pure retailer and characterize price equilibria finally through a computational study we explore the behavior price and profits under different parameters and consumer preferences for the alternative channels

contracting with an urgent supplier under cost information asymmetry abstract we investigate a contract setting problem faced by a manufacturer who can procure major modules from an overseas supplier as well as a local supplier the overseas supplier is prime and offers quality products whereas the local supplier is viewed only as a backup and its products are inferior in quality as the local supplier needs to put in additional effort to fulfill the urgent orders it is difficult for the manufacturer to estimate this urgent supplier s production cost this asymmetric cost information becomes an obstacle for the manufacturer in managing the urgent supplier in this paper we study two types of contingent contracts one is the common price only contract and the other is a contract menu consisting of a transfer payment and a lead time quotation we construct a stackelberg game model and evaluate how the involvement of an urgent supplier with private cost information affects performances of the prime supplier and the manufacturer in different scenarios with or without the urgent supplier under different contingent contracts we also conduct numerical experiments to show how the parameters of the contracts affect profits of the manufacturer

optimal sticky prices under rational inattention this paper presents a model in which price setting firms decide what to pay attention to subject to a constraint on information flow when idiosyncratic conditions are more variable or more important than aggregate conditions firms pay more attention to idiosyncratic conditions than to aggregate conditions when we calibrate the model to match the large average absolute size of price changes observed in micro data prices react fast and by large amounts to idiosyncratic shocks but only slowly and by small amounts to nominal shocks nominal shocks have strong and persistent real effects we use the model to investigate how the optimal allocation of attention and the dynamics of prices depend on the firms environment jel e 3 e5 d8

distribution channel strategies in a mixed market abstract this paper studies equilibrium channel strategies in a mixed market with a public firm and a private firm the public firm is concerned with social welfare while the private firm aims to maximize its own profit each firm decides whether to adopt an integrated or a decentralized channel we examine two standard market competition modes bertrand and cournot within each competition mode we consider two typical vertical contracts wholesale price and two part tariff contracts our results suggest that equilibrium channel structures depend on the market competition mode the vertical contract form and the level of product substitutability specifically the channel strategy of the private firm depends mainly on the vertical contract form under a two part tariff contract the private firm always chooses decentralization under a wholesale price contract the private firm chooses integration for most scenarios except for highly substitutable products under bertrand competition i e under very intense competition the channel strategy of the public firm depends mainly on the competition mode under bertrand competition the public firm always chooses decentralization under cournot competition the public firm always chooses the opposite of the private firm s strategy

alcohol advertising bans consumption and control policies in seventeen oecd countries 1975 2000 this article uses cross country panel data to study the effects of advertising bans and other control policies on alcohol demand the null hypothesis is that advertising bans do not decrease alcohol consumption the study addresses several shortcomings in four previous cross country studies first an explanatory variable is included for other alcohol control policies second the study examines the history of advertising bans in oecd countries third the study also examines differences in cross country trends that characterize developed countries including aging of the population increased tourism higher unemployment rates and increased consumption of wine the mediterranean wine drinking countries are shown to be categorically distinct from the beer drinking countries and nordic spirits drinking countries fourth the study examines the panel data for unit roots and employs model specifications that correct for nonstationary data the empirical results indicate a significantly negative effect for th

differential demand systems a further look at barten s synthesis barten s synthetic model is attractive to applied researchers since it is useful for testing the adequacy of the competing functional forms of differential demand systems including the popular rotterdam and almost ideal demand systems this article shows that the synthetic model is not a mere artificial composite of the known differential demand systems as it has been considered but rather viewed as a model in its own right it is demonstrated that at the individual consumer level barten s model has the same marginal budget shares as generated by specific forms of engel curves formulated by the box cox transformation

a natural experiment of the effect of advertising on sales the sasol case the effect of advertising in a major product category petrol on the market share of a brand petrol produced by sasol of south africa was estimated using variants of a koyck distributed lag model our use of a single equation model was supported by granger causality tests showing that advertising caused sales but that sales did not simultaneously cause advertising the situation is a unique natural experiment in that non promotional variables in the marketing mix price location of sale and product characteristics are largely invariant between sasol s petrol and competing brands allowing isolation of the effect of advertising on market share dummy variables were used to allow for the varying effect of different advertising campaigns and thus allow for the quality of advertising copy the results supported the hypotheses that sales are determined by past as well as current advertising expenditures but that the cumulative effects of advertising lasts for months rather than years the major finding

the macroeconomic relationship between advertising and consumption profit maximizing firms advertise in order to increase the demand for the goods they produce hence we would expect increases in a firm s advertising to be associated with increases in consumption of the firm s goods ceteris paribus the increased demand for the firm s goods may be associated with decreased demand of their rivals goods at the market level increases in advertising by the industry may not be accompanied by increased consumption of the industry s output this is because changes in the levels of advertising among firms in a particular industry could merely rearrange market shares if this is true then in that industry a firm which increases its advertising relative to its rivals will gain sales at the rivals expense advertising in this case is a zero sum game when we aggregate across markets to consider advertising at the national level the question of the effect of advertising upon consumption has still different implications if increased advertising levels for the economy are associated with increased consumption this suggests that consumers are increasing current consumption at the expense of future consumption i e savings if this is true then advertising affects aggregate consumption and the business cycle in this paper we consider the relationship between aggregate advertising and aggregate consumption while previous research e g ashley granger and schmalensee 2 and schmalensee 24 has suggested that consumption affects advertising most previous empirical studies of the causal relationship between aggregate advertising and aggregate consumption reject the hypothesis that advertising affects consumption 6 section 8 3 12 an early study was verdon mcconnell and roesler 28 who studied the relationship between advertising and aggregate demand gnp while they found advertising to be pro cyclical and to have a positive effect on aggregate demand correlations between various leads and lags led them to conclude that no clear pattern existed this study was followed by ekelund and gramm 14 who faulted the verdon mcconnell and roesler study for considering the relationship between advertising and aggregate demand instead ekelund and gramm concentrated upon the relationship between advertising and