tracking the market dynamic pricing and learning in a changing environment dynamic pricing of commodities without knowing the exact relation between price and demand is a much studied problem most existing studies assume that the parameters describing the market are constant during the selling period this severely reduces their practical applicability since in reality market characteristics may change all the time without the firm always being aware of it in the present paper we study dynamic pricing and learning in a changing market environment we introduce a methodology that enables the price manager to hedge against changes in the market and provide explicit upper bounds on the regret a measure of the performance of the firm s pricing decisions in addition this methodology guides the selection of the optimal way to estimate the market process we provide numerical examples from practically relevant situations to illustrate the methodology

a dynamic multinomial probit model for brand choice with different long run and short run effects of marketing mix variables in this paper we propose a dynamic multinomial probit model in order to estimate the long run and short run effects of marketing mix variables on brand choice the latent variables which contain the unobserved perceived utilities follow a first order vector error correction autoregressive process of order 1 with current and lagged explanatory variables the unrestricted autoregressive parameter matrix concerns the intertemporal correlation in perceived utilities of households over purchase occasions and indicates the persistence in brand choice as explanatory variables we consider relative prices and promotional activities like feature and display an important and novel feature of our model is that it allows for different long run and short run effects of promotional activities thereby extending the models that are currently available in the literature additionally to account for different base preferences for brands across households we allow for consumer heterogeneity our application concerns a panel of households choosing among several brands of a fmcg our estimated model turns out to be an improvement over a static model and over a model with only short run effects in terms of in sample fit and out of sample forecasts copyright 2000 john wiley sons ltd

alternative theories of the rate of interest in this paper i shall develop a framework which may be used to examine several alternative theories of the rate of interest the four most widely accepted approaches are the neo classical loanable funds keynes s liquidity preference neoclassical synthesis islm and basil moore s horizontalist or endogenous money i will use the framework developed here to present a fifth an integration of liquidity preference theory with an endogenous money approach i first briefly set forth the primary alternative approaches then develop an analytical framework based on an asset or stock approach and use it to discuss several theories of the interest rate those advanced by keynes by moore by neoclassical theory and the monetarists by kregel and by tobin finally i shall use the framework to reconcile liquidity preference theory with an endogenous money approach

the determinants of developing countries access to the international capital market the traditional analysis of western credit relations with developing countries mainly focuses on the possibilities of debtor countries meeting their debt obligations and tries to find factors behind possible default the present study explicitly considers flows of funds between creditors and debtors and investigates the determinants of developing countries access to the international capital market a combination of gdp per capita net debt to gdp and the investment share predicts access to the 1985 87 capital market correctly in 75 per cent of the cases

evaluation of salesforce size and productivity through efficient frontier benchmarking the efficient operation of a salesforce is a critical element in the profitability of many firms three factors play key roles the salesforce s size its allocation and its productivity this gives rise to the following questions can salesforce performance be improved by 1 hiring more salespeople 2 allocating them more effectively to the various sales districts and or 3 improving salesperson productivity through better calling patterns in terms of consumers and product line items the practice of most firms and the methodology used in most of the academic literature to address salesforce design and productivity questions is a bottom up approach this approach starts with assessments by each salesperson of the sales and effort corresponding to each customer and prospect in their territory these assessments are then aggregated to the territory district and national levels this paper takes an alternative top down approach it is based on an estimated relationship between district level sales and salesforce size effort and other variables this more macro level decision tool can be used by management in parallel to and as an objective check of the more conventional and more subjective bottom up approach we develop an efficient frontier methodology which allows us to estimate how total district sales respond to salesforce size district potential and competitive activity in the firm s best performing districts the methodology utilized is based on data envelopment analysis dea and yields a benchmark measure of each district s efficient frontier sales sales assuming the district s salesforce allocates its effort as done in the best performing districts based on the estimated response function we discuss the three potential sources of increased profitability closing the inefficiency gap of each of the lower performing districts optimally reallocating the current salesforce to the various districts and changing the current size of the salesforce to its optimal level the inefficiency gap issue is addressed through comparison of the parameter estimates for the best districts obtained through our methodology with those of an average district sales response function obtained using regression analysis this comparison points to an important methodological finding the use of multiple estimation results may lead to an improved understanding of the phenomenon being studied in our case the identification of the likely causes of district productivity inefficiencies the latter two sources of increased profitability salesforce reallocation and changes in the current salesforce size are addressed analytically given the district level efficient frontier sales response function the proposed top down procedure using the efficient frontier methodology and the insights it provides are examined by evaluating the operations of two different salesforces one selling manufacturing equipment and the other business equipment in both cases regression based analysis would have resulted in a declaration that the status quo was close to optimal while the frontier based analysis pointed out that strong gains were possible in certain districts in particular for both firms the greatest increases in profit are obtained through improved salesforce efficiency in the lower performing districts not through salesforce size or district allocation adjustments at the more micro level a comparison of the frontier and regression parameters made it possible to identify which specific changes in the daily operations of the salesforces would allow the realization of these potential productivity gains in our two cases this could be obtained through more emphasis on pursuing prospective accounts

measuring consumer preferences using conjoint poker we develop and test an incentive compatible conjoint poker cp game the preference data collected in the context of this game are comparable to incentive compatible choice based conjoint cbc analysis data we develop a statistical efficiency measure and an algorithm to construct efficient cp designs we compare incentive compatible cp to incentive compatible cbc in a series of three experiments one online study and two eye tracking studies our results suggest that cp induces respondents to consider more of the profile related information presented to them compared with cbc

the economics of development a survey i the subject our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries this includes in particular how standards of living in the population are determined and how they change over time and further how policy can or should be used in the influence of these processes the definition contains in principle much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest this is as it should be but it poses a problem for a survey in a journal a comprehensive treatment is infeasible so we shall follow a different route the survey will focus on what i take to be the major themes and approaches which characterise the productive aspects of the subject there is therefore no pretence at being exhaustive the purpose is rather to highlight some of the advances many of these have been of real substance there are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended what it is and what it is not this survey is addressed to economists and students of economics who know the tools of their trade but not necessarily how they have been applied to and fashioned for the analysis of the economics of developing countries it is a description of the ways in which problems can be productively formulated and approached in terms of examples chosen for their intrinsic importance and interest the vastness of the subject means that we have to be highly selective it does not seek to provide a summary evaluation of the current view of the appropriate response to immediate policy questions it is not a history of thought nor a research manifesto nor an attempt to adjudicate or settle the major debates where they arise naturally from the major purpose some judgements on these subjects will be offered but they do not themselves constitute the primary intent of this survey there are three lines of enquiry or sets of questions which have i suggest been distinctive of the most fruitful work in development economics they will

an analysis of optimal advertising under uncertainty we examine the firm s optimal advertising behavior under conditions of uncertainty for the static one period model we show that the firm s attitude toward risk may be responsible for the potential divergence between advertising decisions under uncertainty and those under deterministic conditions for the dynamic multi period model the ultimate impact of uncertainty on advertising is further complicated when the sales response function contains an unknown parameter and the firm wishes to gain more information about it through experimentation we demonstrate that whether it is optimal for the firm to experiment at an advertising rate higher equal to or lower than the myopic one period level would depend on the specification of the response function finally we offer some empirical evidence for our assumption of a quadratic sales response function using time series data of twelve major brands of cigarettes

technical note a price vector model of demand for consumer durables preliminary developments although considerable research has been conducted on optimal pricing policies for manufacturers relatively little work has been done on how price enters the consumer choice process in this paper a model is developed for durables purchasing which integrates both economic and behavioral research by specifying a vector of five price concepts which affect purchasing behavior of particular interest are variables relating to future price expectations due to data limitations a revised model is estimated and the results provide preliminary support for the general model

modeling and estimation in changing market environments in many marketing contexts managers and researchers are concerned with modeling the response of performance variables e g sales or market share to one or more decision variables e g advertising or price or other predictor variables modeling efforts in these contexts may consider either the response of an individual entity such as a single consumer or firm or the aggregate response of a collection of entities usually they involve the specification of mathematical models where the unknown parameters are assumed a priori to be constant these unknown parameters are then estimated by fitting the models to available data using some form of regression analysis the rationale for expending effort in this area is the expectation that through activities of this type the decision maker gains understanding of the market process and therefore is able to make better decisions the response of a firm s market performance to decision predictor variables may be moderated by numerous external factors by competitive factors and by the levels of the firm s decision variables for example the sensitivity of sales to price may vary depending on time of year overall economic conditions and or levels of advertising or promotion certain characteristics of marketing research is often concerned with the modeling of market response over time however the nature of the relationships being modeled may change due to shifts in consumer tastes changing marketing strategies competition and other reasons currently used constant parameter models are not capable of adequately reflecting such changing market environments therefore alternate modeling approaches should be considered recent work in statistics and econometrics suggests the appropriateness of variable parameter models for such problems this methodology permits model coefficients to change over time in this paper various potentially useful variable parameter models are discussed reported marketing applications are examined and issues pertaining to the application of this relatively new methodology to marketing problems are investigated professor winer gratefully acknowledges support from the faculty research fund of the graduate school of business columbia university professor wildt was on the faculty of the university of georgia when the paper was written

the impact of utility balance and endogeneity in conjoint analysis adaptive metric utility balance is at the heart of one of the most widely used and studied methods for conjoint analysis we use formal models simulations and empirical data to suggest that adaptive metric utility balance leads to partworth estimates that are relatively biased smaller partworths are upwardly biased relative to larger partworths such relative biases could lead to erroneous managerial decisions metric utility balanced questions are also more likely to be inefficient and in one empirical example contrary to popular wisdom lead to response errors that are at least as large as nonadaptive orthogonal questions we demonstrate that this bias is because of endogeneity caused by a winner s curse shrinkage estimates do not mitigate these biases combined with adaptive metric utility balance shrinkage estimates of heterogeneous partworths are biased downward relative to homogeneous partworths although biases can affect managerial decisions our data suggest that empirically biases and inefficiencies are of the order of response errors we examine viable alternatives to metric utility balance that researchers can use without biases or inefficiencies to retain the desired properties of 1 individual level adaptation and 2 challenging questions

the demand for information and the diffusion of a new product abstract the paper examines the implications of the ability of a consumer to learn about the characteristics of a new product on the diffusion of the product over time the demand for information by the consumer is shown to generate a sigmoid diffusion curve for total sales of the product further it is shown that over time the elasticity of demand along the diffusion curve increases

consumer learning in a turbulent market environment modeling consumer choice dynamics after a product harm crisis abstract the authors empirically study consumer choice behavior in the wake of a product harm crisis which creates consumer uncertainty about product quality they develop a model that explicitly incorporates the impact of such uncertainty on consumer behavior assuming that consumers are uncertain about the mean product quality level and learn about product quality through the signals contained in use experience and the product harm crisis and also that consumers are uncertain about the precision of the signals in conveying product quality and update their perception of this precision over time they estimate this model using a scanner panel data set that includes consumer purchase history before during and after a product harm crisis that affected kraft foods australia s peanut butter division in june 1996 the proposed model fits the data better than the standard consumer learning model which assumes consumers are uncertain about product quality level but the precision of information in conveying p

financial markets shutdown and reaccess we employ a discrete time parametric duration model on a group of 121 countries over the period 1970 2011 and find that the probability of the end of financial markets shutdown and reaccess falls as these events become longer we also show that 1 shutdown episodes are longer when economic prospects are poor and the degree of financial openness falls the chief executive has been in office for long periods and the country has a default history and 2 spells of reaccess tend to be longer when economic growth improves and financial openness increases there are neither government crises nor government instability and the country did not default in the past jel c41 g15

opening up international trade with eastern europe trade with eastern europe carl b hamilton and l alan winters previous economic policy in the soviet union and eastern europe sought to restrict international trade with market economies hence liberalization and reform should now lead to a huge increase in such trade this will have a major impact both on the reforming economies and on their new trade partners first we develop an empirical model of trade flows between existing market economies and use this to forecast long run trade flows as the former soviet union and eastern europe are reabsorbed into the world economy second we provide a more detailed analysis of one key sector agricultural trade we compare and contrast three regime changes reform in the east admission of the east to the ec cap and worldwide success on agricultural liberalization in the gatt third we adduce evidence of high quality human capital in eastern europe and argue that this will tend to confer a comparative advantage in quite sophisticated products we conclude by stressing that since trade cannot be permanently and profoundly unbalanced western market economies can enjoy potential gains from trade only if they allow market access to emergent producers from the former soviet union and eastern europe

rewarding the profligate and punishing the prudent and poor some recent proposals for debt relief at a conference organized in june 1986 by the overseas development council on the future of the world bank former west german chancellor helmut schmidt investment banker felix rohatyn and the chairman of the federal reserve board paul volcker all suggested that the massive 60 billion trade surplus of japan be mobilized to solve what they termed as the debt problem of the third world mr barber conable the new president of the world bank is quoted by the new york times 3 july 1986 as saying clearly there is the expectation that japan in view of the light defense burden it carries will participate fully in solving collective debt problems of the world he characterized the japanese surpluses as a considerable world asset and suggested that establishing a special facility such as the one established by the imf in the 1970s to tap saudi arabia s surplus petro dollars to recycle them would be one way of dealing with it nearly a year ago in october 1985 at the annual meetings of the world bank and imf at seoul us treasury secretary james baker signaled a shift in the us approach to the debt crisis the baker plan aimed to help highly indebted middle income countries 15 were mentioned by baker 10 of them in latin america resume growth and achieve adjustment towards a sustainable debt position through the adoption of the following course of action by lenders debtors and multilateral agencies within the context of the then prevailing imf supervised case bycase approach commercial banks the world bank and other multilateral development banks were to increase lending to these countries baker suggested that the commercial banks commit a total of 20 billion in net new lending over 198688 and the multilateral development banks an additional 9 billion during the same period this increased net lending was to be in support of the adoption of market oriented policies by indebted nations growth was to be promoted inflation reduced and external balance restored by expanding the role of the private sector and of markets both domestically and internationally the first offspring of the baker plan is the recent growth oriented adjustment plan for mexico which was foisted upon a reluctant imf perhaps the world s last unreconstructed bastion of adjustment through austerity by the combined pressure of the us treasury and federal reserve board and the mexican threat of repudiation the imf s reservations concerned the budgetary features of the package not the novel real growth and oil price contingency clauses which it supported the 18 month standby arrangement with the imf provides mexico with sdr 1 4 billion about 1 7 billion in support of what is described as a comprehensive program of adjustment and structural reform the total financing package amounts to 12 billion of which 6 billion is to come from the commercial banks mexico s economic problems had of course been intensified dramatically as a result of the drop in the price of oil policies aimed at bringing mexico s real gdp growth to 3 5 by 1987 from recent negative growth rates of 4 or 5 involve a variety of growth oriented market friendly adjustment measures increased public investment current expenditure cuts tax reform measures marketbased adjustments in tariffs and prices charged by public sector enterprises liberalizing trade measures mexico is about to join the ga7t and only very mild by traditional imf standards budgetary restraint a reduction in the deficit gdp ratio by three percentage points over 1986 87 the aspect of the mexican program of most interest for this discussion is the actions taken

debt relief investment and growth from 1989 to 2004 the donor community provided approximately 400 billion in debt relief to developing countries in an attempt to promote growth and reduce poverty using a sample of 118 developing countries this paper empirically assesses the impact of debt relief on growth via 1 resources made available for investment from reduced debt service payments and 2 improved incentives to invest from a reduced debt stock although the results show no general evidence of a growth effect from debt relief the study provides certain evidence that it promotes investment and thereby growth in countries not classified as hipcs

a two stage sales forecasting procedure using discounted least squares the authors develop a two stage forecasting methodology for estimating the sales responses to marketing and environmental variables when it is likely that their impacts will change unpredictably over time the methodology is based on an integrated least squares procedure that uses regression analysis in stage 1 to estimate the coefficients of the controllable and environmental variables in combination with a stage 2 discounted least squares smoothing procedure that updates key parameters in response to changing market conditions the effectiveness of the methodology is demonstrated by applying it to weekly sales data from a major retail chain

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

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

research note estimating heterogeneous price thresholds a brand choice model with heterogeneous price threshold parameters is used to investigate a three regime piecewise linear stochastic utility function the model is used to explore the relationships between aspects of consumer price sensitivity and price thresholds using hierarchical bayes modeling with the markov chain monte carlo mcmc method this study contributes to the modeling literature on discontinuous likelihoods in choice models the empirical application using our scanner panel data set shows that the reference effect and loss aversion are more marked after price thresholds are taken into heterogeneous price response models furthermore loss aversion is attenuated by using price thresholds than by an aggregate homogeneity model without price thresholds

the loanable funds fallacy saving finance and equilibrium the loanable funds controversy cannot be settled without prior agreement on the meanings of income and equilibrium the essential claim of loanable funds theory is that disequilibrium in the goods market affects the rate of interest this paper introduces financial accounting concepts and a new understanding of the principle of effective demand to clarify that loanable funds theory relies on a concept of income other than current income namely yesterday s income in the case of robertson or full employment equilibrium income in the case of hicks in robertson s case this is a matter of bad accounting a confusion between an income statement and a balance sheet in hicks s more subtle case it is about the inapplicability of walras law to a monetary economy keynes s principle embodies a marshallian concept of system equilibrium under which the goods market is treated as never in disequilibrium in the sense required by loanable funds theory copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

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

iylm a general theory compatible replacement for islm the islm model introduced in 1936 37 to provide interpretations of keynes s general theory subsequently emerged in its hicks hansen form as the workhorse and trained intuition of post war macroeconomists however islm is an essentially orthodox model based on neoclassical foundations and fails completely as an adequate representation of central elements of keynes s macroeconomic thought this article proposes iylm as a replacement for islm the new model being general theory compatible in that it is grounded only on key propositions in that work its purpose is to contribute within the constraints of a two market framework to the resuscitation of keynes s macroeconomics as an alternative to the inadequacies of much current macroeconomics the first part of the article derives the model and argues that those sympathetic to the general theory can accept the iylm framework whilst simultaneously rejecting islm the second part shows that hicks hansen islm is based on an income augmented form of orthodox loanable funds theory

the virtues of gradualism and legitimacy in the transition to a market economy this paper presents a simplified model of sectoral restructuring in eastern europe a move towards allocative efficiency is desired by the reform minded government but the shift to higher productivity which such efficiency requires would lead to massive layoffs and labour reallocation in the transition period we look at the impact of political constraints unanimity and or majority worker approval on reform proposals when the government faces a heterogeneous workforce holding private information on relative outside opportunities when the budgetary consequences of exit compensations are so important as to make partial reforms preferable to full reforms gradualism emerges as the optimum in a dynamic context without government commitment it is also shown that under democratic majority rule a government in control of the agenda of reforms can win majority approval for plans which end up hurting majority interests intertemporally by threatening to switch majorities in future reform proposals this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

a multiattribute model of consumer choice during product learning the processes of consumer preference formation during product learning are analyzed a hypothesis about how individuals form attribute expectations is used to derive a dynamic multinomial logit model of individual choice which endogenously recognizes product learning the model and its underlying assumptions are then tested in the context of an interactive grocery store learning game the results support most elements of the proposed model structure an assumption of temporal stationarity in attribute salience however could not be supported approaches to implementation of the model are discussed and implications for marketing management and research in individual choice modeling are addressed

prospective aid and indebtedness relief a proposal primary needs of human development are not met in poor development countries although ambitious goals have been set by the international community to meet specific human development targets by 2015 official development aid is lagging and excessive external debt continues to drain much needed resources from poor countries despite the recent hipc highly indebted poor countries initiative this paper outlines a 15 year program for implementing the 2015 human development targets while resolving fully the debt overhang problem for a set of 49 poor countries the proposal requires additional contributions from 23 rich countries amounting to 0 1 of 1 of their gdp over each of the 15y ears although only a small part of the effort would take the form of debt cancellation the outstanding debt of the 49 poor countries would be totally extinct by year 2015 the program to be implemented in a multilateral framework in which all interested parties have an effective voice relies on several basic premises a long term commitment by donors a fair burden sharing among creditors a fair distribution of newly available resources among poor countries heavily indebted or not a targeting of these resources to human development programs a conditionality guaranteeing reasonable aid effectiveness

money interest and capital a study in the foundations of monetary theory list of illustrations list of tables series preface preface 1 real analysis and monetary analysis an introduction part i real analysis critique 2 wicksellian monetary theory 3 neo walrasian monetary theory 4 the neoclassical synthesis revisited 5 keynesian and monetarists 6 friedman s monetary framework the quantity theory restated part ii monetary analysis foundations 7 re laying the foundations of monetary theory 8 some further questions of method and methodology 9 marshallian microfoundations of monetary equilibrium 10 macroeconomic analysis and monetary equilibrium 11 real analysis and monetary analysis the central arguments references index

official finance requirements in the 1990s abstract estimates based on a savings gap model with endogenous private bank lending suggest that projections of development aid requirements for sub saharan africa low income asia and latin america by fishlow 1987 the development committes 1988 and the un 1988 are too optimistic a substantial increase in official financial flows to developing countries is necessary it appears that an increase in private bank exposure by 25 a 35 debt reduction and a 35 interest reduction as proposed in the recent brady plan are insufficient to reach minimum growth rates in the three developing regions

price as a stimulus to think the case for willful overpricing consumers aware of a new benefit will often experience uncertainty about its personal relevance or usage value this paper shows that the decision to deliberate further to resolve this uncertainty and reach a polarized judgment of personal relevance critically depends on the posted price in particular a price above the consumer s initial willingness to pay might be thought provoking and enhance the perception of relevance with a certain probability this behavioral mechanism is introduced formally and by way of an experiment with reference to the purchase of organic lettuce and fair trade coffee accounting for the effect of price as a stimulus to think a monopolistic firm should either over price transgressive pricing or under price regressive pricing in comparison to the consumer s willingness to pay under certain circumstances the firm should also empower consumers with means that reduce the effort of deliberation

costa contribution optimizing sales territory alignment the alignment of sales territories has a considerable impact on profit and represents a major problem in salesforce management practitioners usually apply the balancing approach this approach balances territories as well as possible with respect to one or more attributes such as potential or workload unfortunately this approach does not necessarily guarantee maximizing profit contribution thus it does not provide an evaluation of the profit implications of an alignment proposal in comparison with the existing one in consequence several authors proposed nonlinear integer optimization models in the 1970s these models attempted to maximize profit directly by considering the problems of allocating selling time calling plus travel time across accounts as well as of assigning accounts to territories simultaneously however these models turned out to be too complex to be solvable therefore the authors have either approximated the problem or proposed the application of heuristic solution procedures on the basis of the suboptimal principle of equating marginal profit of selling time across territories to overcome these limitations we propose a new approach costa an acronym for contribution optimizing sales territory alignment in contrast to previously suggested profit maximizing approaches costa operates with sales response functions of any given concave form at thelevel of sales coverage units scus that cover a group of geographically demarcated individual accounts thus costa works with sales response functions at a more aggregated level that requires less data than other profit maximization approaches costa models sales as a function of selling time which includes calling time as well as travel time assuming a constant ratio of travel to calling time in addition the formulation of the model shows that an optimal solution requires only equal marginal profits of selling time across sales coverage units per territory but not across scus of different territories basically costa consists of an allocation model and an assignment model both of which are considered simultaneously the allocation model optimally allocates the available selling time of a salesperson across the scus of his or her territory whereas the assignment model assigns the scus to territories thus costa predicts the corresponding profit contribution of every possible alignment solution which enables one to perform what if analyses the applicability of the model is supported by the development of a powerful heuristic solution procedure a simulation study showed that costa provided solutions that are on average as close as 0 195 to an upper bound on the optimal solution the proposed heuristic solution procedure enables one to solve large territory alignment problems because the computing time increases only quadratically with the number of scus and proportionally to the square root of the number of salespersons in principle we also show how costa might be expanded to solve the salesforce sizing as well as the salespersons location problem the usefulness of costa is illustrated by an application the results of this application indicated substantial profit improvements and also outlined the weaknesses of almost balanced territories it is quite apparent that balancing is only possible at the expense of profit improvements and also does not lead to equal income opportunities for the salespersons this aspect should be dealt with separately from territory considerations by using territory specific quotas and linking variable payment to the achievement of these quotas furthermore the superiority of costa turned out to be stable in a simulation study on the effect of misspecified sales response functions costa is of interest to researchers as well as practitioners in the salesforce area it aims to revive the stream of research in the 1970s that already proposed sales territory alignment models aimed at maximizing profit such profit maximizing models are theoretically more appealing than approaches that strive to balance one or several attributes such as potential or workload costa s main advantage over previous profit maximizing approaches is that it is less complex consequently costa demands less data so that even large problems can be solved close to optimality within reasonable computing times

does the revival of international private capital flows mean the end of aid an analysis of developing countries access to private capital summary despite the collapse of private flows in the years following the debt crisis since 1987 international flows of private capital have been increasing at a remarkable rate some argue that these trends spell the end of aid as private capital will take its place but flows of private capital have been highly concentrated in a small number of countries with african countries in particular having apparently little access this paper presents an analysis of the determinants of private capital flows with a data set covering many low income and highly indebted countries the results suggest that such countries have a low probability of being able to gain access to sizeable quantities of private capital so that aid remains necessary to finance their requirement for external finance

a dynamic analysis of market structure based on panel data internal market structure analysis infers brand positions in an attribute space from preference and choice data given a market in which consumers have heterogeneous tastes for attributes previous market structure models have adopted a static framework e g elrod 1988 chintagunta 1994 elrod and keane 1995 furthermore they assumed that consumer perceptions of brand attributes do not vary across consumers yet these approaches may render inaccurate representations of market structure if there is state dependence in consumer choice behavior this paper attempts to incorporate consumer choice dynamics into market structure models by specifying the source of choice dynamics explicitly in particular the process by which past purchases affect current choices is modeled in a framework which captures both consumer habit persistence and variety seeking behavior more specifically consumer preferences for brand attributes are modeled to depend on the attributes of brands bought on the previous purchase occasion furthermore the modeling approach adopted incorporates heterogeneity in both consumer preferences and perceptions of brand attributes the audience of this paper includes practitioners and academics interested in understanding consumer choice processes and inferring market structure from consumer choice data the proposed models are estimated on nielsen scanner panel data for margarine peanut butter yogurt and liquid detergent using simulated maximum likelihood techniques the empirical results suggest that accounting for choice dynamics improves both in sample and out of sample fit the results indicate that the average consumer is habit persistent in all the product categories studied this result is consistent with the findings of kannan and sanchez 1994 who conducted an aggregate analysis of consumer variety seeking behavior across product categories however the results obtained in this paper suggest that consumers are heterogeneous with respect to the processes by which past purchases affect current purchases these results provide strong evidence for habit persistence and variety seeking in brand attributes to be the behavioral source of consumer choice dynamics in food categories thus consumer tastes utility weights seem to be affected by the attributes of the brands consumed in the past given the empirical result that a large proportion of consumers are habit persistent this suggests that tastes are reinforced by the brand attributes consumed in the past the empirical results also show that not accounting for state dependence in market structure models for panel data may produce misleading results that is depending on consumer behavior patterns models that do not account for state dependence may distort the true nature of competition among brands more specifically the results confirm the expectation that if there is habit persistence that is if consumer tastes are reinforced by attributes of brands consumed in the past models that do not capture this choice dynamics will overestimate the distance between similar brands furthermore the policy experiments conducted suggest that 1 static models overestimate the short run impact of a price cut on the sales of the brand on promotion 2 price cuts hurt the sales of the more similar brands more and 3 free samples affect relatively less similar brands the most finally this paper studies variety seeking and habit persistence across brands over purchase occasions however variety seeking behavior may also involve the purchase of a portfolio of brands or items at a purchase occasion consumers may buy multiple items knowing that prior to the next trip they may want to consume different items simanson 1990 walsh 1995 this type of behavior can be modeled within the context of dynamic expected utility maximization with forward looking consumers the development and estimation of market structure models that include forward looking consumers who maximize expected utility over a planning horizon incorporating their future tastes and needs and shopping for an inventory of brands remain an important future research issue

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

research note on managerially efficient experimental designs in most marketing experiments managerial decisions are not based directly on the estimates of the parameters but rather on functions of these estimates for example many managerial decisions are driven by whether or not a feature is valued more than the price the consumer will be asked to pay in other cases some managerial decisions are weighed more heavily than others the standard measures used to evaluate experimental designs e g a efficiency or d efficiency do not accommodate these phenomena we propose alternative managerial efficiency criteria m errors that are relatively easy to implement we explore their properties suggest practical algorithms to decrease errors and provide illustrative examples realistic examples suggest improvements of as much as 30 in managerial efficiency we close by considering approximations for nonlinear criteria and extensions to choice based experiments

optimal advertising strategies this paper considers advertising policies for a very general class of response functions it is shown that if a pulsing policy is used awareness or sales eventually settle down to a steady cycle and the average response over the cycle is a decreasing function of the length of the cycle when response shows increasing returns to scale it is possible in theory to use a device called chattering to replace the true response by a straight line which lies above the true response in the region in which chattering is used a numerical example is given to show how the optimal policy can be computed when part of the response is linear and the results obtained are compared with those of the best practicable approximation to chattering it is shown that the problem of maximising awareness or sales subject to a budget constraint is structurally identical with maximising profit after advertising with or without a constraint in either case it is possible that for part of the time the optimal policy involves chattering

learning and fatigue effects revisited investigating the effects of accounting for unobservable preference and scale heterogeneity using multiple choice tasks per respondent in discrete choice experiment studies increases the amount of available information however respondents learning and fatigue may lead to changes in observed utility function preference taste parameters as well as the variance in its error term scale they need to be controlled to avoid potential bias a sizable body of empirical research offers mixed evidence in terms of whether these ordering effects are observed we point to a significant component in explaining these differences we show how accounting for unobservable preference and scale heterogeneity can influence the magnitude of observed ordering effects

trade capital and the transition in central europe the potential for export oriented growth and the impact of official capital injections is assessed for five central european countries in the years 1990 2000 by means of a neoclassical simulation model export growth is essential for the transition to a market oriented economy and the recovery of central europe implying the need for trade liberalization by both the east and the west if this condition is being met satisfactory gdp growth rates appear possible even without external financial support

observed and unobserved preference heterogeneity in brand choice models this paper extends the scanner based choice literature by explicitly incorporating individual level brand preference data we illustrate our model using a unique data set that combines survey and scanner data collected from the same individuals the addition of individual specific brand preference information significantly improves fit and prediction furthermore this observed heterogeneity better explains choice than does unobserved heterogeneity in the standard scanner model s parameters more importantly we find that the standard model underestimates the importance of consumers brand preferences and overestimates both brand loyalties and price sensitivities brand loyalty is overestimated because models without preference information confound state dependence heterogeneity and preference effects price sensitivities are inflated because the average preference based consumer is implicitly assumed to be more willing to switch from his preferred brand than is the real preference based consumer further standard models overestimate the heterogeneity in price and loyalty sensitivities and misidentify both price and loyalty sensitive consumers the managerial implications of our findings and the applicability of our methodology when survey data are collected infrequently and for only a subsample of consumers are pursued we demonstrate that even under these circumstances better populationwide pricing and promotion decisions are identified and more accurate targeting results

imported materials prices wage policy and macroeconomic stabilization this paper analyses two simple wage rules that keep employment constant when there are shocks to the prices of imported materials one rule ties nominal wages to the gnp deflator rather than the consumer price index the second rule followed by japan after the second oil price shock ties the real wage to real gnp the paper shows the effects on output real income and other macro economic variables of choosing either rule in place of the real wage stability provided by conventional wage indexation

advertising budget allocation under uncertainty this article presents a model for the allocation of an advertising budget to geographic market segments or territories when the sales response to advertising in each segment is characterized by a probability distribution it is shown that allocation decisions that are based on the expected sales response may be associated with a relatively large degree of risk and therefore non optimal to a risk averse manager the model derives an efficient frontier in terms of the expected profit and its variance resulting from alternative budget allocations the manager then chooses the optimal allocation based on his her preference function

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

are the costs of cleaning up eastern europe exaggerated economic reform and the environment widespread concern has been expressed that the costs of reducing environmental pollution in eastern europe will divert substantial investment resources from the pool available for industrial modernization in fact apart from a number of severely damaged areas the general level of exposure to major pollutants in eastern europe is not high by comparison with the oecd countries even without specific environmental policies the process of general economic reform combined with energy conservation induced by higher energy prices will reduce emissions by nearly 50 percent a modest fraction of general investment in industrial modernization will deal with the remaining problems of current emissions provided that sensible systems of environmental charges are enforced the countries will then be faced with the problem of cleaning up the debris of past industrial activity which can be tackled over an extended period of years as in other industrial economies copyright 1991 by oxford university press

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

assessing salesforce marginal productivity marginal productivity of salesforce excluding checkout clerks in a retail store is difficult to assess an analytical model is presented here explaining this productivity using salesforce workers per hour as the factor of production the explanatory variable and sales transactions per hour as the level of production the explained variable the model incorporates self service transactions controls for various seasonal effects time of day day of the week month of the year and generates solutions for in store salesforce assignment across opening hours and sales points to control for possible endogeneity between the transactions and salesforce size variables instrumental variables are employed in the calibration process the model is calibrated using data from a major retail chain based in latin america both at the storewide level and for groups of individual store departments the results corroborate the existence of diminishing returns to scale for the workers per hour factor and a significant l

a note on eaton and gersovitz s model of borrowing abstract eaton and gersovitz s model of borrowing with default risk was re estimated using data from 1977 and 1981 the results of the re estimation indicated that the developing countries were less credit constrained in the late seventies early eighties than in the early dseventies however the model did not describe the later sample period as well as the earlier sample period one reason for the reduced explanatory power of their model is that the model does not incorporate many of the changes that occured in the world economy after 1974 and does not reflect the current structure of indebtedness of the developing countries

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