assessing the effects of wives earnings on family income inequality we argue that the effect of wives earnings can be assessed meaningfully only by comparing the observed distribution of income with a reference distribution the components of the standard decomposition of the gini coefficient have no implicit reference distribution and therefore should not be interpreted as a measure of the effect of an income source on inequality we suggest several intuitive counterfactual reference distributions and illustrate their use with 1979 and 1989 u s data we conclude that wives earnings reduced inequality in that the income distribution would have been less equal in their absence alternative measures of the impact have mixed results

a dynamic model of brand choice when price and advertising signal product quality in this paper we develop a structural model of household behavior in an environment where there is uncertainty about brand attributes and both prices and advertising signal brand quality four quality signaling mechanisms are at work 1 price signals quality 2 advertising frequency signals quality 3 advertising content provides direct but noisy information about quality and 4 use experience provides direct but noisy information about quality we estimate our proposed model using scanner panel data on ketchup if price is important as a signal of brand quality then frequent price promotion may have the unintended consequence of reducing brand equity we use our estimated model to measure the importance of such effects our results imply that price is an important quality signaling mechanism and that frequent price cuts can have significant adverse effects on brand equity the role of advertising frequency in signaling quality is also significant but it is less quantitatively important than price in the printed version of marketing science vol 27 no 6 erdem et al 2008 was mistakenly identified as a research note it is a regular article and has been corrected here and in the online table of contents

a decomposition analysis of the trend in uk income inequality post war britain has experienced a number of dramatic demographic and social changes that have undoubtedly influenced the distribution of income there has been a rise in the number of pensioners whose incomes are relatively low a considerable increase in the number of young and old households living on their own and a remarkable expansion in the proportion of working wives the potential importance of these structural changes suggests that their impact on the income distribution needs to be examined systematically before any attempt can be made to interpret the observed trend in overall income inequality adequately the method usually adopted for this purpose attempts to create a comparable time series of distributions based on the structural characteristics pertaining in one particular year for example if we wished to investigate the effect of shifts in the age structure of the population this approach would disaggregate the distribution in one year tl and estimate what the distribution would have been like if the age structure had been the same as that observed in some other year to on the assumption that other distributional characteristics such as ageincome differentials and inequality within age groups remain invariant to this demographic change the comparison between the actual distribution at t1 and the constructed distribution at t1 with to s age structure is taken to indicate the impact of changes in the age structure over the period concerned this comparison can be presented in terms of quantile shares summary measures of inequality or the entire lorenz curves this approach known as shift share analysis or standardising the inequality series see semple i975 love and wolfson i976 dinwiddy and reed i977 royal commission i977 rowley and henderson i978 macleod and horner i980 is perfectly adequate for simple and straightforward structural changes when several changes are occurring simultaneously however it becomes difficult to identify the contribution of the individual factors and to assess their relative importance to the overall trend in inequality furthermore the combined impact of several structural influences will not in general sum up to the inequality change requiring explanation the purpose of this paper is to propose an alternative method of analysing

managing advertising and promotion for long run profitability in recent years manufacturers have become increasingly disposed toward the use of sales promotions often at the cost of advertising yet the long term implications of these changes for brand profitability remain unclear in this paper we seek to offer insights into this important issue we consider the questions of i whether it is more desirable to ad vertise or promote ii whether it is better to use frequent shallow promotions or infrequent deep promotions and iii how changes in regular prices affect sales relative to increases in price promotions additional insights regarding brand equity the relative magnitude of short and long term effects and the decomposition of advertising and promotion elasticities across choice and quantity decisions are obtained to address these points we develop a heteroscedastic varying parameter joint probit choice and regression quantity model our approach allows consumers responses to short term marketing activities to change in response to changes in marketing actions over the long term we also accommodate the possibility of competitive reactions to policy changes of a brand the model is estimated for a consumer packaged good category by using over eight years of panel data the resulting parameters enable us to assess the effects of changes in advertising and promotion policies on sales and profits our results show that in the long term advertising has a positive effect on brand equity while promotions have a negative effect furthermore we find price promotion elasticities to be larger than regular price elasticities in the short term but smaller than regular price elasticities when long term effects are considered consistent with previous research we also find that most of the effect of a price cut is manifested in consumers brand choice decisions in the short term but when long term effects are again considered this result no longer holds last we estimate that the long term effects of promotions on sales are negative overall and about two fifths the magnitude of the positive short term effects finally making reasonable cost and margin assumptions we conduct simulations to assess the relative profit impact of long term changes in pricing advertising or promotion policies our results show regular price decreases to have a generally negative effect on the long term profits of brands advertising to be profitable for two of the brands and increases in price promotions to be uniformly unprofitable

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

the long term effect of marketing strategy on brand sales few studies have considered the relative role of the integrated marketing mix advertising price promotion product and place on the long term performance of mature brands instead emphasizing advertising and price promotion thus little guidance is available to firms regarding the relative efficacy of their various marketing expenditures over the long run to investigate this issue the authors apply a multivariate dynamic linear transfer function model to five years of advertising and scanner data for 25 product categories and 70 brands in france the findings indicate that the total short term plus long term sales elasticity is 1 37 for product and 74 for distribution conversely the total elasticities for advertising and discounting are only 13 and 04 respectively this result stands in marked contrast to the previous emphasis in the literature on price promotions and advertising the authors further find that the long term effects of discounting are one third the magnitude of the short term effects the ratio is reversed from other aspects of the mix in which long term effects exceed four times the short term effects underscoring the strategic role of these tools in brand sales

managing blood donations with marketing blood banks rely on marketing to encourage donors to give blood many if not most blood banks in the united states are community based not for profit organizations with limited marketing budgets as a result blood banks increasingly use novel and inexpensive online media i e paid owned and earned poe media in their marketing efforts we propose a dynamic model to help blood bank marketing managers understand how blood donations can be managed via online poe media we analytically characterize the optimal forward looking paid media strategies taking into account the asymmetric costs related to shortage and excess of blood as well as the possibility of a cost free target donation zone we detail new advertising resource allocation rules for blood banks and show when traditional allocation recommendations do not apply additionally we discover that under certain circumstances owned earned media activities hurt the blood bank s performance despite being predominantly free we validate our analytical model by using daily donation data from a community based blood bank and measure the effects of poe media activities on the level of blood donated

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

measuring the effect of subsidized training programs on movements in and out of employment despite over two decades of u s experience in operating large scale subsidized training programs for low income and unemployed workers the effects of these programs are still highly controversial the controversy arises from the difficulty of specifying the model of participant outcomes in the absence of training that is necessary in any nonexperimental program evaluation in this paper we suggest that some of these difficulties may be overcome by focusing on a very simple measure of outcomes namely the probability of employment we present a variety of estimates of the effect of training on the probability of employment for the 1976 cohort of adult male participants in the comprehensive employment and training act ceta program our methods range from a simple comparison of pre and post training employment probabilities between trainees and nonparticipants to a fully specified first order markov model of employment probabilities with individual heterogeneity there is consistent evidence across methods that ceta participation increased the probability of employment in the three years after training by from 2 to 5 percentage points classroom training programs appear to have had significantly larger effects than on the job programs although the estimated effects of both kinds of programs are positive we also find that movements in and out of employment for trainees and nonparticipants are reasonably well described by a first order process conditional on individual heterogeneity in the context of this model ceta participation appears to have increased both the probability of moving into employment and the probability of continuing employment

empirical analysis of competitive product line pricing decisions lead follow or move together researchers have recently developed models for determining which market conduct best describes observed data we apply these techniques from the new empirical industrial organization literature to the competitive product line pricing decision where a firm strategically prices its brands when determining the profit maximizing conduct in the market demand cost and market structure are estimated endogenously empirical results from analyzing price competition in the laundry detergent market between procter and gamble selling tide and eraplus and lever brothers offering wisk and surf indicate that each firm positions its strong brand as a stackelberg leader with the rival s minor brand being the follower

unemployment and income distribution time series evidence from sweden for a long time swedish politicians have been devoted to keeping unemployment at low levels the main reason for this devotion is probably the belief that higher unemployment increases inequality of income and welfare this is a reasonable belief since unemployment risks are highest among people with low earnings capacity even when they have a job by means of micro data it is easy to verify a marked low income profile of unemployment further the swedish unemployment insurance system replaces only about 70 per cent of foregone income and quite many unemployed do not qualify for any benefits see bjorklund and holmlund 1991 increases in unemployment however are associated with many changes in the economy with complex consequences for the personal distribution of income in addition to the income losses suffered by those who become unemployed higher unemployment also affects the factor shares of income the profit share typically declines during recessions and because upper income groups receive a relatively high proportion of their income from capital income a countervailing mechanism is involved changes in unemployment also affect inflation which in turn might influence the personal distribution of income the distributional effects of inflation are an open question this note makes an investigation into the relationship between unemployment and the personal distribution of income using swedish time series data the method was first used on u s data by blinder and

accounting for inequality trends decomposition analyses for the uk 1971 86 eight explanations for uk income inequality trends between 1971 and 1986 are assessed by pooling evidence from inequality index decompositions by population sub group and by income source the principal causes of the aggregate trends were a mixture of changes in earnings inequality employment structure and unemployment but this mixture changed over time the impact of wage inequality changes on income inequality changes fell during the 1970s and 1980s reflecting the secular decline in the importance of employment earnings for household income packages unemployment changes had their largest impact at the start of the 1980s between 1981 and 1986 self employment income changes appear to have had the largest influence

the shape of advertising response functions revisited a model of dynamic probabilistic thresholds prior work in marketing has suggested that advertising threshold effects levels beneath which there is essentially no sales response are rarely encountered in practice because advertising policies settle into effective ranges through early trial and error thresholds cannot be observed directly and arguments for their existence must be based primarily on a statistical footprint that is on relative fits of a range of model types to detect possible threshold effects we formulate a switching regression model with two regimes in only one of which advertising is effective mediating the switch between the two regimes is a logistic function of category specific dynamic variables e g order of entry time in market number of competitors and advertising levels nesting a variety of alternative formulations among them both standard concave and s shaped responses a sequence of comparisons among parametrically related models strongly suggests that threshold effects exist that market share response to advertising is not necessarily globally concave that superior fit cannot be attributed to model flexibility alone and that dynamic environmental competitive and brand specific factors can influence advertising effectiveness these effects are evident in two evolving durables categories suvs and minivans although not in the one mature nondurable category liquid detergent studied

competition for market share or for market size oligopolistic equilibria with varying competitive toughness for an industry producing a composite commodity we propose a comprehensive concept of oligopolistic equilibrium allowing for a parameterized continuum of regimes varying in competitive toughness each firm sets simultaneously its price and its quantity under two constraints relative to its market share and to market size the price and the quantity equilibrium outcomes always belong to the set of oligopolistic equilibria when firms are identical and we let their number increase any sequence of symmetric oligopolistic equilibria converges to the monopolistic competition outcome further results are derived in the symmetric ces case concerning in particular the collusive solution enforceability

inequality in five countries in the 1980s the role of demographic shifts markets and government policies this paper uses luxembourg income study lis data to examine levels of and trends in income inequality in canada the netherlands sweden the united kingdom and the united states inequality increased in sweden the united kingdom and the united states but did not increase in canada and the netherlands increased inequality of household heads earnings and increased shares of spouses earnings in family income account for much of the observed increases in income inequality the public sector can in general be assigned a moderating effect on these changes demographic shifts are not assigned any major role in inequality changes excerpt

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

the impact of income components on the distribution of family incomes attempts have recently been made to assign inequality contributions to various components of income this paper discusses the issues involved in such assignments and highlights the problems that follow from having a number of possible decomposition rules u s data on the distribution of family incomes are used to examine the relative influence of these income components and to evaluate empirically the performance of different decomposition rules a wide range of inequality contributions can be obtained even when restricted to only naturally derived decomposition rules some of the results are plainly absurd and serve to warn against the indiscriminate use of decomposition formulae without first investigating their properties

cournot equilibrium without apology existence and the cournot inverse demand function in a multi commodity framework with absence of wealth effects we prove the existence of equilibrium for cournot oligopoly and that the concept is completely non ambiguous we also obtain a uniquely defined endogenous inverse demand function depending only on the competitive sector

firm expansion size spillovers and market dominance in retail chain dynamics we develop and estimate a dynamic game of strategic firm expansion and contraction decisions to study the role of firm size in future profitability and market dominance modeling firm size is important because retail chain dynamics are more richly driven by expansion and contraction than de novo entry or permanent exit additionally anticipated size spillovers may influence the strategies of forward looking firms making it difficult to analyze the effects of size without explicitly accounting for these in the expectations and hence decisions of firms expansion may also be profitable for some firms while detrimental for others thus we explicitly model and allow for heterogeneity in the dynamic link between firm size and profits as well as potential for persistent brand effects through firm specific unobservable factors as a methodological contribution we surmount the hurdle of estimating the model by extending a two step procedure that circumvents solving the game the first stage combines semipar

the dynamic spillovers of entry an application to the generic drug industry this paper examines whether experience from entry in one market can potentially enhance profitability at a future market opportunity for a related product we formulate and estimate a dynamic game of entry in which forward looking firms make decisions not just based on present benefits of past entry but also anticipating potential future benefits of current entry dynamic spillovers of entry are incorporated through a firm specific unobservable to the researcher cost that depends on past entry decisions the unobserved costs may also be serially persistent thus the model allows for firm specific unobserved heterogeneity that evolves based on firm actions the challenge of estimating a dynamic game with serially correlated unobserved state variables subject to endogenous feedback is overcome by embedding a particle filter based technique in a nested fixed point algorithm using an application to a stylized model of entry in the generic pharmaceutical industry we underscore the motivation for the model specification and the methodology developed our estimates imply positive spillover effects of entry moreover these spillovers suggest heterogeneity not just across firms but also within firms over time based on their history of entry decisions our results illustrate that entry may potentially provide firms with additional strategic advantage in later markets and that entry spillovers may be an important factor to consider in the equilibrium evolution of the generic drug industry the web appendix is available at https doi org 10 1287 mnsc 2016 2648 this paper was accepted by j miguel villas boas marketing

a theory of combative advertising in mature markets with competing firms a common role for advertising is to shift consumer preferences towards the advertiser in a tug of war with no effect on category demand in this paper we analyze the effect of such combative advertising on market power we show that depending on the nature of consumer response combative advertising can reduce price competition to benefit competing firms however it can also lead to a procompetitive outcome where individual firms advertise to increase their own profitability but collectively become worse off this is because combative advertising can intensify price competition such that an advertising war leads to a price war similar to price competition advertising competition can result in a prisoner s dilemma where all competing firms make less profit even when the effect of each firm s advertising is to enhance consumer preferences in its favor given such procompetitive effects we further show that cost of combative advertising could be a blessing in disguise higher unit cost of advertising resulting in lower equilibrium levels of advertising leading to higher prices and profits we conduct a laboratory experiment to investigate how combative advertising by competing brands influences consumer preferences our experimental analysis offers strong support for our conclusions

linear inequality methods to enforce partnerships under uncertainty an overview we review different generic conditions on stochastic outcome functions to enforce either efficient or nearly efficient partnerships their logical relationship is explored two kinds of conditions are considered however the property for an action profile to be compatible plays a crucial role in both kinds also two kinds of enforcement mechanisms are considered enforcement through utility transfers and enforcement through repetition

modeling multiple sources of heterogeneity in multinomial logit models methodological and managerial issues we offer a framework to specify and estimate various sources of heterogeneity in multinomial logit brand choice models we let each brand specific intercept and each parameter of the explanatory variable vector vary randomly across households in addition we distinguish loyal households from the rest our results suggest that incorporating multiple sources of heterogeneity improves the model fit and suggests higher impact of marketing mix elements on brand choice we highlight the importance of incorporating multiple sources of heterogeneity the model we implement yields valuable managerial insights

regional income stratification in unified germany using a gini decomposition approach frick j r and goebel j regional income stratification in unified germany using a gini decomposition approach regional studies using representative micro data from the german socio economic panel study soep this paper delivers new insights into the development of income inequality and regional stratification in germany after unification this paper applies a new method for detecting social stratification by a decomposition of the gini index that yields the obligatory between and within group components as well as an overlapping index for the different sub populations it is found that east germany is still a stratum on its own when using post government income but since 2001 no longer is when using pre government income these results remain stable when using alternatively defined regional classifications however there are also indications of some regional variation within west germany frick j r et goebel j les tranches de revenu regional dans l allemagne unifiee employant une decompositi

structural analysis of manufacturer pricing in the presence of a strategic retailer consumer goods manufacturers usually sell their brands to consumers through common independent retailers theoretical research on such channel structures has analyzed the optimal behavior of channel members under alternative assumptions of manufacturer retailer interaction vertical strategic interaction research in empirical industrial organization has focused on analyzing the competitive interactions between manufacturers horizontal strategic interaction decision support systems have made various assumptions about retailer pricing rules e g constant markup category profit maximization the appropriateness of such assumptions about strategic behavior for any specific market however is an empirical question this paper therefore empirically infers 1 the vertical strategic interaction vsi between manufacturers and retailer 2 the horizontal strategic interaction hsi between manufacturers simultaneously with the vsi and 3 the pricing rule used by a retailer the approach is particularly appealing because it can be used with widely available scanner data where there is no information on wholesale prices researchers usually have no access to wholesale prices even manufacturers who have access to their own wholesale prices usually have limited information on competitors wholesale prices in the absence of wholesale prices we derive formulae for wholesale prices using game theoretic solution techniques under the specific assumptions of vertical and horizontal strategic interaction and retailer pricing rules we then embed the formulae for wholesale prices into the estimation equations while our empirical illustration is using scanner data without wholesale prices the model itself can be applied when wholesale prices are available early research on the inference of hsi among manufacturers in setting wholesale prices using scanner data e g kadiyali et al 1996 1999 made the simplifying assumption that retailers charge a constant margin this assumption enabled them to infer wholesale prices and analyze competitive interactions between manufacturers in this paper we show that this model is econometrically identical to a model that measures retail price coordination across brands hence the inferred cooperation among manufacturers could be exaggerated by the coordinated pricing category management done by the retailer we find empirical support for this argument this highlights the need to properly model and infer vsi simultaneously to accurately estimate the hsi when using data at the retail level functional forms of demand have been evaluated in terms of the fit of the model to sales data but recent theoretical research on channels lee and staelin 1997 tyagi 1999 has shown that the functional form has serious implications for strategic behavior such as retail passthrough while the logit and linear model implies equilibrium passthrough of less than 100 lee and staelin call this vertical strategic substitute vss the multiplicative model implies optimal passthrough of greater than 100 vertical strategic complement vsc because passthrough rates on promotions have been found to be below or above 100 chevalier and curhan 1976 armstrong 1991 we empirically test the appropriateness of the logit vss and the multiplicative vsc functional form for the data we perform our analysis in the yogurt and peanut butter categories for the two biggest stores in a local market we found that the vss implications of the logit fit the data better than the multiplicative model we also find that for both categories the best fitting model is one in which 1 the retailer maximizes category profits 2 the vsi is manufacturer stackelberg and 3 manufacturer pricing hsi is tacitly collusive the fact that the retailer maximizes category profits is consistent with theoretical expectations the inference that the vsi is manufacturer stackelberg reflects the institutional reality of the timing of the game retailers set their retail prices after manufacturers set their wholesale prices note that in the stores and product categories that we analyze the two manufacturers own the dominant brands with combined market shares of about 82 in the yogurt market and 65 in the peanut butter market the result is also consistent with a balance of power argument in the literature the finding that manufacturer pricing is tacitly collusive is consistent with the argument that firms involved in long term competition in concentrated markets can achieve tacit collusion managers use decision support systems for promotion planning that routinely make assumptions about vsi hsi and the functional form the results from our analysis are of substantive import in judging the appropriateness of assumptions made in such decision support systems

oligopolistic competition as a common agency game oligopolistic competition is analyzed in a complete information multi principal common agency framework where principals are firms supplying differentiated goods and the agent is a representative consumer we first propose a canonical formulation of common agency games and a parameterization of the set of equilibria based on the lagrange multipliers associated with the participation and the incentive compatibility constraints of each principal this is used to characterize the set of equilibria in the intrinsic and non intrinsic games the former includes the latter as well as the standard price and quantity equilibrium outcomes it may also include the collusive solution

planning marketing mix strategies in the presence of interaction effects companies spend millions of dollars on advertising to boost a brand s image and simultaneously spend millions of dollars on promotion that many believe calls attention to price and erodes brand equity we believe this paradoxical situation exists because both advertising and promotion are necessary to compete effectively in dynamic markets consequently brand managers need to account for interactions between marketing activities and interactions among competing brands by recognizing interaction effects between activities managers can consider interactivity trade offs in planning the marketing mix strategies on the other hand by recognizing interactions with competitors managers can incorporate strategic foresight in their planning which requires them to look forward and reason backward in making optimal decisions looking forward means that each brand manager anticipates how other competing brands are likely to make future decisions and then by reasoning backward deduces one s own optimal decisions in response to the best decisions to be made by all other brands the joint consideration of interaction effects and strategic foresight in planning marketing mix strategies is a challenging and unsolved marketing problem which motivates this paper this paper investigates the problem of planning marketing mix in dynamic competitive markets we extend the lanchester model by incorporating interaction effects constructing the marketing mix algorithm that yields marketing mix plans with strategic foresight and developing the continuous discrete estimation method to calibrate dynamic models of oligopoly using market data both the marketing mix algorithm and the estimation method are general so they can be applied to any other alternative model specifications for dynamic oligopoly markets thus this dual methodology augments the decision making toolkit of managers empowering them to tackle realistic marketing problems in dynamic oligopoly markets we illustrate the application of this dual methodology by studying the dynamic lanchester competition across five brands in the detergents market where each brand uses advertising and promotion to influence its own market share and the shares of competing brands empirically we find that advertising and promotion not only affect the brand shares own and competitors but also exert interaction effects i e each activity amplifies or attenuates the effectiveness of the other activity normatively we find that large brands underadvertise and overspend on promotion while small brands underadvertise and underpromote finally comparative statics reveal managerial insights into how a specific brand should respond optimally to the changes in a competing brand s situation more generally we find evidence that competitive responsiveness is asymmetric

dynamic models incorporating individual heterogeneity utility evolution in conjoint analysis it has been shown in the behavioral decision making marketing research and psychometric literature that the structure underlying preferences can change during the administration of repeated measurements e g conjoint analysis and data collection because of effects from learning fatigue boredom and so on in this research note we propose a new class of hierarchical dynamic bayesian models for capturing such dynamic effects in conjoint applications which extend the standard hierarchical bayesian random effects and existing dynamic bayesian models by allowing for individual level heterogeneity around an aggregate dynamic trend using simulated conjoint data we explore the performance of these new dynamic models incorporating individual level heterogeneity across a number of possible types of dynamic effects and demonstrate the derived benefits versus static models in addition we introduce the idea of an unbiased dynamic estimate and demonstrate that using a counterbalanced design is important from an estimation perspective when parameter dynamics are present

logit demand estimation under competitive pricing behavior an equilibrium framework discrete choice models of demand have typically been estimated assuming that prices are exogenous since unobservable to the researcher product attributes such as coupon availability may impact consumer utility as well as price setting by firms we treat prices as endogenous specifically prices are assumed to be the equilibrium outcomes of nash competition among manufacturers and retailers to empirically validate the assumptions we estimate logit demand systems jointly with equilibrium pricing equations for two product categories using retail scanner data and cost data on factor prices in each category we find statistical evidence of price endogeneity we also find that the estimates of the price response parameter and the brand specific constants are generally biased downward when the endogeneity of prices is ignored our framework provides explicit estimates of the value created by a brand i e the difference between consumers willingness to pay for a brand and its cost of production we develop theoretical propositions about the relationship between value creation and competitive advantage for logit demand systems and use our empirical results to illustrate how firms use alternative value creation strategies to accomplish competitive advantage

inequality and poverty in united states the effects of rising dispersion of men s earnings and changing family behaviour using semiparametric density estimation techniques we analyse the effect of rising dispersion of men s earnings and related changes in family behaviour on increasing inequality in the distribution of family income in the united states for the period 1969 1989 the growing dispersion of men s earnings and changing family structure can account for most of the rise in family income inequality by contrast the increase in labour force participation by women offset this trend inequality grew at a slower rate in the 1990s than in earlier decades largely because of stabilization in the relative earnings of men from low income families

differences in dynamic brand competition across markets an empirical analysis we investigate differences in the dynamics of marketing decisions across geographic markets empirically we begin with a linear quadratic game involving forward looking firms competing on prices and advertising based on the corresponding markov perfect equilibrium we propose estimable econometric equations for demand and marketing policy our model allows us to measure empirically the strategic response of competitors along with economic measures such as firm profitability we use a rich dataset that combines sales marketing mix factor cost and advertising cost data for eighteen geographic markets in the frozen entree category we find that larger markets tend to be less price sensitive and more profitable than smaller markets we also find evidence of positive carryover of own advertising on own demand in terms of consumer substitution patterns we find that the role of advertising in our data seems to be more category building complementary than share stealing competitive the complementary role is stronger in larger markets on the supply side we find that firms make smaller adjustments to own advertising as goodwill goes up consistent with cross advertising effects on demand firms make smaller larger adjustments to advertising in response to competitive goodwill in the less competitive larger in the more competitive smaller markets finally we find that consumer welfare decreases increases in larger smaller markets when firms move to a zero advertising regime

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

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

a simultaneous approach to the whether what and how much to buy questions consumer s purchase decisions of whether to buy what to buy and how much to buy are examined simultaneously based on a consumer utility maximization problem an unobservable threshold price about which a consumer pivots from nonpurchase to purchase can be deduced with any model specification the interrelationships between purchase decisions can be explicitly derived the model is applied to coffee purchasing data in addition by suppressing the nonpurchase options the model is compared with an alternative approach appearing in the marketing literature

general equilibrium concepts under imperfect competition a cournotian approach in a pure exchange economy we propose a general equilibrium concept under imperfect competition the cournotian monopolistic competition equilibrium and compare it to the cournot walras and the monopolistic competition concepts the advantage of the proposed concept is to require less computational ability from the agents the comparison is made first through a simple example then through a mon abstract concept the p equilibrium based on a general notion of price coordination c 1997 academic press

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

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

multistage multiproduct advertising budgeting abstract we propose and analyze an effective model for the multistage multiproduct advertising budgeting problem this model optimizes the advertising investment for several products by considering cross elasticities different sales drivers and the whole planning horizon we derive a simple procedure to compute the optimal advertising budget and its optimal allocation the model was tested to plan a realistic advertising campaign we observed that the multistage approach may significantly increase the advertising profit compared to the successive application of the single stage approach

measuring the effects of socio economic variables on the income distribution an application to the east german transition process this paper develops a discrete variant of the semiparametric methodology of dinardo fortin and lemieux 1996 dfl to measure the effects of socio economic variables on the income distribution although the proposed method is also based on the calculation of hypothetical income distributions by reweighting the original population it is much easier to implement the framework is applied to examine the distributional effects of rising unemployment decreasing female labor market participation and widening income structure in east germany following the reunification with west germany in 1990 the empirical results suggest that both these tendencies contributed considerably to the recent increase in income inequality in east germany

do changes in demographic characteristics explain declining male employment rates examination of the australian case using a propensity score re weighting decomposition approach using australian data spanning the period from 1981 to 2001 we apply a propensity score re weighting decomposition approach to investigate the extent to which the large decline in the male employment population rate over this period can be attributed to changes in socio demographic characteristics we find that changes in observed characteristics account for little of the aggregate decline however changes in characteristics are found to be important for population sub groups in particular changes in partner status and partner employment status have acted to decrease employment rates of younger males but increase employment rates of older males a further finding is that holding observed characteristics constant there has been a very large decline in the employment rate of 55 64 year olds with bachelor degree qualifications in the course of applying the decomposition method we illustrate that validity of inferences depends on appropriate specification of the reweighting function

planning media schedules in the presence of dynamic advertising quality a key task of advertising media planners is to determine the best media schedule of advertising exposures for a certainbudget conceptually the planner could choose to do continuous advertising i e schedule ad exposures evenly overall weeks or follow a strategy of pulsing i e advertise in some weeks of the year and not at other times previous theoretical analyses have shown that continuous advertising is optimal for nearly all situations however pulsing schedules are very common in practice either the pract ice of pulsing is inappropriate or extant models have not adequately conceptualized the effects of advertising spending over time this paper offers a model that shows pulsing strategies can generate greater total awareness than the continuous advertising when the effectiveness of advertisement i e adquality varies overtime specifically ad quality declines because of advertising wearout during periods of continuous advertising and it restores due to forgetting effects during periods of no advertising such dynamics make it worth while for advertisers to stop advertising when ad quality becomes very low and wait for ad quality to restore beforestarting the next burst again as is common in practice based on the extensive behavioral research on advertising repetition and advertising wearout we extend the classical nerlove and arrow 1962 model by incorporating the notions of repetition wearout copy wearout and ad quality restoration repetition wearout is a result of excessive frequency beca use ad viewers perceive that there is nothing new to be gained from processing the ad they withdraw their attention or they become unmotivated to react to advertising information copy wearout refers to the decline inad quality due to passage of time independent of the level of frequency ad quality restoration is the enhancement of ad quality during media hiatus as a consequence of viewers forgetting the details of the advertised messages thus making ads appear like new when reintroduced later the proposed model has the property that when wearout effects are present a strategy of pulsing is superior to continuous advertising even when the advertising response function is concave this is illustrated by a numerical example that compares the total awareness generated by a single concentrated pulse of varying duration blitz schedules and continuous advertising the even schedule this property can be explained by the tension between the pressure to spend the fixed media budget quickly to avoid copy wearout and the opposing pressure to spread out the media spending over time to mitigate repetition wearout the proposed model is empirically tested by using brand level data from two advertising awareness tracking studies that also include the actual spen ding schedules the first data set is for a major cereal brand while the other is for a brand of milk chocolate such advertising tracking studies are now a common and popular means for evaluating advertising effectiveness in many markets e g millward brown narketmind in the empirical tests the model parameters are estimated by using the kalman filter procedure which is eminently suited for dynamic models because it attends to the intertemporal dependencies in awareness build up and decay via the use of conditional densities the estimated parameters are statistically significant have the expected signs and are meaningful from both theoretical and managerial viewpoints the proposed model fits both the data sets rather well and better than several well known advertising models namely the vidale wolfe brandaid litmus and trackermodels but not decisively better than the nerlove arrow model however unlike the nerlove arrow model the proposed model yields different total awareness for different strategies of spending the same fixed budget thus allowing media planners to discriminate among several media schedules given the empirical support for the model the paper presents an implementable approach for utilizing it to evaluate large numbers of alternative media schedules and determine the best set of media schedules for consideration in media planning this approach is based on an algorithm that combines a genetic algorithm with the kalman filter procedure the paper presents the results of applying this approach in the case studies of the cereal and milk chocolate brands the form of the best advertising spending strategies in each case was a pulsing strategy and there were many schedules that were an improvement over the media schedule actually used in each campaign

unemployment and the size distribution of income the impact of changes in the level of unemployment on the u k size distribution of annual income is examined using cross section data increased unemployment is shown to have a discernible regressive effect however reductions in shares were not highly concentrated at the very bottom of the distribution many individuals affected by unemployment during the year are in households families not at the bottom of the distribution particularly because of the presence of other working members copyright 1986 by the review of economic studies limited

cooperative r d and vertical product differentiation abstract a partial equilibrium model with vertical product differentiation coumot competition and quality determined by r d expenses is analysed cooperative agreements on r d entail higher levels of r d quality output and welfare than at the non cooperative equilibrium under well denned conditions on spillover rates this confirms in a new setting a well known outcome of models with cost reducing r d further cooperation in r d allows a larger number of firms to operate in the industry than in the non cooperative case via a reduction in prices a new source of social gains from cooperative research is identified

optimal bidding in multi item multislot sponsored search auctions we study optimal bidding strategies for advertisers in sponsored search auctions in general these auctions are run as variants of second price auctions but have been shown to be incentive incompatible thus advertisers have to be strategic about bidding uncertainty in the decision making environment budget constraints and the presence of a large portfolio of keywords makes the bid optimization problem nontrivial we present an analytical model to compute the optimal bids for keywords in an advertiser s portfolio to validate our approach we estimate the parameters of the model using data from an advertiser s sponsored search campaign and use the bids proposed by the model in a field experiment the results of the field implementation show that the proposed bidding technique is very effective in practice we extend our model to account for interactions between keywords in the form of positive spillovers from generic keywords into branded keywords the spillovers are estimated using a dynamic linear

going where the ad leads you on high advertised prices and searching where to buy an important role of informative advertising is to inform consumers of the simple fact that the shop that advertises sells a particular product this information may help consumers to save on their search activities instead of wandering around a consumer can simply visit the shop that has advertised knowing that there he can find the commodity he is looking for the implications of this simple fact have not been studied before using game theoretic reasoning in a model that combines consumer search and firms advertising we show that firms may find it optimal to advertise prices that are higher than nonadvertised prices the important mechanism underlying this result is that advertising lowers the expected search cost for consumers through this analysis we provide a new insight into the role of informative advertising

recent developments in dynamic advertising research a variety of continuous time differential functions have been developed to investigate dynamic advertising problems in business and economics fields since major dynamic models appearing before 1995 have been reviewed by a few survey papers we provide a comprehensive review of the dynamic advertising models published after 1995 which are classified into six categories i nerlove arrow model and its extensions ii vidale wolfe model and its extensions iii lanchester model and its extensions iv the diffusion models v dynamic advertising competition models with other attributes and vi empirical studies for dynamic advertising problems for each category we first briefly summarize major relevant before 1995 models and then discuss major after 1995 models in details we find that the dynamic models reviewed in this paper have been extensively used to analyze various advertising problems in the monopoly duopoly oligopoly and supply chain systems our review reveals that the diffusion models have not been used to analyze advertising problems in supply chain operations which may be a research direction in the future moreover we learn from our review that very few publications regarding dynamic advertising problems have considered the supply chain competition we also find that very few researchers have used the diffusion model to investigate the dynamic advertising problems with product quality as a decision variable and the pricing decision has not been incorporated into any extant lanchester model the paper ends with a summary of our review and suggestions on possible research directions in the future

a dynamic model of the effect of online communications on firm sales interpersonal communications have long been recognized as an influential source of information for consumers internet based media have facilitated information exchange among firms and consumers as well as observability and measurement of such exchanges however much of the research addressing online communication focuses on ratings collected from online forums in this paper we look beyond ratings to a more comprehensive view of online communications we consider the sales effect of the volume of positive negative and neutral online communications captured by web crawler technology and classified by automated sentiment analysis our modeling approach captures two key features of our data dynamics and endogeneity in terms of dynamics we model daily measures of online communications about a firm and its products as contributing to a latent demand generating stock variable to account for the endogeneity we extend the latent instrumental variable technique to account for dynamic endogenous regressors our results demonstrate a significant effect of positive negative and neutral online communications on daily sales performance failure to account for endogeneity results in a severe attenuation of the estimated effects from a managerial perspective we demonstrate the importance of accounting for communication valence as well as the impact of shocks to positive negative and neutral online communications

income inequality income composition and macroeconomic trends israel 1979 93 the paper offers several explanations for income inequality trends in israel during 1979 93 two types of analysis are employed decomposition of the gini coefficient by income source and population sub group and time series regression on macroeconomic variables it is found that the slight increase in inequality over the period is a result of opposing forces and that the major difference between the inflation 1979 84 and stabilization 1985 93 periods is in the inequality reducing effect of direct taxes increasing in the first period while declining in the second unemployment had a regressive impact whereas inflation acted as a progressive tax in the first period but not in the second

the evolution of internal market structure we present a dynamic factor analytic choice model to capture evolution of brand positions in latent attribute space our dynamic model allows researchers to investigate brand positioning in new categories or mature categories affected by structural change such as entry we argue that even for mature categories not affected by structural change the assumption of stable attributes may be untenable we allow for evolution in attributes by modeling individual level time specific attributes as arising from dynamic means the dynamic attribute means are modeled as a bayesian dynamic linear model dlm the dlm is nested within a factor analytic choice model our approach makes efficient use of the data by leveraging estimates from previous and future periods to estimate current period attributes we demonstrate the robustness of our model with data that simulate a variety of dynamic scenarios including stationary behavior we show that misspecified attribute dynamics induce temporal heteroskedasticty and correlation between the preference weights and the error term applying the model to a panel data set on household purchases in the malt beverage category we find considerable evidence for dynamics in the latent brand attributes from a managerial perspective we find advertising expenditures help explain variation in the dynamic attribute means