substitutability and the welfare effects of endowment increases abstract mas colell has conjectured that if all commodities are normal goods for a certain consumer and if the aggregate excess demand function of the other consumers satisfies the condition of gross substitutability then an increase in his initial endowments will lead to a new equilibrium allocation which will be preferred by him this excludes the immiserizing growth paradox it is shown that a sufficient condition is that commodities be also net substitutes for the consumer that has been singled out

implications of market structure for elasticity structure though considerable attention has been given to market structure little research has been done on the relationship between market structure and elasticity structure the authors develop and partia

global warming and hyperbolic discounting the use of a constant discount rate to study long lived environmental problems such as global warming has two disadvantages the prescribed policy is sensitive to the discount rate and with moderate discount rates large future damages have almost no effect on current decisions time consistent quasi hyperbolic discounting alleviates both of these modeling problems and is a plausible description of how people think about the future we analyze the time consistent markov perfect equilibrium in a general model with a stock pollutant the solution to the linear quadratic specialization illustrates the role of hyperbolic discounting in a model of global warming

foreign ownership and the theory of trade and welfare some standard topics in the theory of international trade are reconsidered in this paper by distinguishing between national and aggregate income when fixed supplies of foreign inputs are present within the home country under conditions that would ensure a national welfare gain if foreign ownership were absent international transfer economic growth or tariff policy might cause a national welfare loss in the presence of foreign ownership the techniques developed could be applied to other domestic distinctions such as those based on race sex age or ethnicity and to the theory of customs unions in a three country world

modeling inertia and variety seeking tendencies in brand choice behavior theories of exploratory behavior suggest that inertia and variety seeking tendencies may coexist within the individual implying that the same individual may exhibit inertia and variety seeking at different times depending on his her choice history past research has not allowed for such within consumer variability in these tendencies the purpose of this study is to present a choice model that allows us to identify such hybrid behavior i e a mixture of inertia and variety seeking and to distinguish hybrid behavior from simpler types of behavior such as pure inertia pure variety seeking and zero order behavior the model is estimated at the household level using panel data for three product classes covering a total of 1069 households the empirical analysis shows that more than half the households analyzed exhibited hybrid behavior rather than simpler types of behavior

gross substitutes and immiserizing growth abstract in a pure exchange economy immiserizing growth occurs when an increase in the endowment of one trader results in a new equilibrium where that trader has lower utility this paper demonstrates that such perverse behavior is ruled out when excess demands satisfy a particular gross substitute condition

please or squeeze brand performance implications of constrained and unconstrained multi item promotions existing research on price promotions typically investigates the effects of single product promotions however brand managers often promote multiple items simultaneously to bolster the performance of a complete brand line this paper investigates the brand performance implications of such multi item promotions we distinguish between two types of multi item promotions traditional unconstrained multi item promotions that grant a discount irrespective of the size or composition of the purchase set and constrained multi item promotions that require consumers to purchase specific quantities self bundling or even predetermined combinations fixed bundling of promoted items using a normative consumer decision model the authors analyze the relative effectiveness of these promotions in terms of unit sales and revenue impact and show that promotion performance is moderated by consumers preference for variety the authors find that unconstrained multi item promotions outperform single item promotions especially in markets without variety seeking in markets with variety seeking unconstrained multi item promotions are not as effective in stealing extra sales from competition because consumers prefer to spread their purchases across all items including competitive ones however in those markets self bundling promotions are particularly effective because they force consumers to adopt larger amounts of the promoted items at the expense of competitors finally in neither type of market does fixed bundling substantially improve promotion performance

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

competitive maps the structure underlying asymmetric cross elasticities a special case of three mode factor analysis is used to portray the systematic structure underlying asymmetric cross elasticities for a broad class of market share attraction models analysis of the variation over retail outlets and weeks reveals competitive patterns corresponding to sales for the major brands in the market as well as patterns reflecting shelf price competition analysis of the brand domain results in a joint space one set of brand positions portrays how brands exert influence over the competition the other set of points portrays how brands are influenced by others the interset distances angles provide direct measures of competitive pressures maps are formed as spatial representations of each of the competitive patterns discovered

a result on the transfer problem in international trade theory abstract the purpose of this paper is to provide a result on the welfare effect of a transfer in a general equilibrium exchange model with no arbitrary restrictions on either the number of commodities traded or the number of countries our result can be stated as follows the donor country is worse off after a transfer if a all goods are net substitutes for the donor b all goods are gross substitutes for the other countries and c all goods are normal for all countries

social and political responses to ecological tax reform in europe an introduction to the special issue this paper introduces the special issue on the policies for ecological tax reform assessment of social responses petras project about responses to ecological tax reform etr in europe although etr is widely accepted to be a policy with desirable effects its implementation has been limited by problems of political acceptability the project aimed to address the question of how to make such a policy more acceptable it is the first study to examine in depth the thinking of members of the general public about the etr policies and is also the first international comparative study of the thinking of ordinary business people about etr policies the petras project methodology was based around the use of interviews and focus groups to inform the assessment of social responses to etr policies and the development of improved designs for them a number of issues emerged relating to awareness trust understanding of the purpose visibility incentives regressivity levels of taxation terminology communication about etr and the use of alternative instruments together with these similarities a pattern of differences between the countries can also be seen the final section of this paper introduces the national studies described in the following papers

bubbles crashes and endogenous expectations in experimental spot asset markets1 spot asset trading is studied in an environment in which all investors receive the same dividend from a known probability distribution at the end of each of t 15 or 30 trading periods fourteen of twenty two experiments exhibit price bubbles followed by crashes relative to intrinsic dividend value when traders are experienced this reduces but does not eliminate the probability of a bubble the regression of changes in mean price on lagged excess bids number of bids minus the number of offers in the previous period p pt a f b 1 o l supports the hypothesis that a e d the one period expected value of the dividend and that f 0 where excess bids is a surrogate measure of excess demand arising from homegrown capital gains losses expectations thus when bt 1 o goes to zero we have convergence to rational expectations in the sense of fama 1970 that arbitrage becomes unprofitable the observed bubble phenomenon can also be interpreted as a form of temporary myopia tirole 1982 from which agents learn that capital gains expectations are only temporarily sustainable ultimately inducing common expectations or priors tirole 1982 four of twenty six experiments all using experienced subjects yield outcomes that appear to the chart s eye to converge early to rational expectations although even in these cases we get 0 and small price fluctuations of a few cents that invite scalping

modeling purchase timing and brand switching behavior incorporating explanatory variables and unobserved heterogeneity the authors use a continuous time semi markov approach to analyze in a single framework the purchase timing and brand switching decisions of households for a frequently purchased product the analysis provides more insights into the dynamics of household purchase behavior than could be obtained from conventional discrete choice models such as logit or probit the authors find that the probability distribution of interpurchase times is not the same for various switching between brands revealing extra information about the purchase timing decisions further they find that though the marketing mix and household demographic variables explain a large part of the variation in the brand switching rates they account for only a small part of the variation in the repeat purchase rates another finding from the analysis is that the rates of switching between brands due to promotional activities such as special displays and price reductions are in reverse order to the share of purchases of the various brands

product and price competition with satiation effects consumers become satiated with a product when purchasing too much too quickly how much is too much and how quickly is too quickly depends on the characteristics of the product relative to the time interval between consumption periods knowing that consumers allocate their budget to products that generate less satiation effects retailers should then choose to sell products that induce minimal satiation but usually this is operationally more costly to study this trade off we provide an analytical model based on utility theory that relates customer consumption to price and satiation in the context of multiple competing retailers we determine the purchasing pattern over time and provide an explicit expression to determine the consumption level in steady state we derive market shares and show that they take the form of an attraction model in which the attractiveness depends on price and product satiation we use this to analyze the competition between firms that maximize long term average profit we characterize the equilibrium under three scenarios i price only competition ii product only competition and iii price and product competition the results reveal the interplay between a key marketing lever price and the firm s ability to offer products that generate less satiation in particular we show that when a firm becomes more efficient at reducing satiation its competitor may benefit if competition is on product only but not if it is on price and product we also find that when satiation effects are not managed a firm s profit may be significantly reduced while a strategic competitor can largely benefit this paper was accepted by yossi aviv operations management

green taxes in a post paris world are millions of nays inevitable turning the paris agreement s greenhouse gas emissions pledges into domestic policies is the next challenge for governments we address the question of the acceptability of cost effective climate policy in a real voting setting first we analyze voting behavior in a large ballot on energy taxes rejected in switzerland in 2015 by more than 2 million people energy taxes were aimed at completely replacing the current value added tax we examine the determinants of voting and find that distributional and competitiveness concerns reduced the acceptability of energy taxes along with the perception of ineffectiveness most people would have preferred tax revenues to be allocated for environmental purposes second at the same time of the ballot we tested the acceptability of alternative designs of a carbon tax with a choice experiment survey on a representative sample of the swiss population survey respondents are informed about environmental distributional and competitiveness effects of each carbon tax design these impacts are estimated with a computable general equilibrium model this original setting generates a series of novel results providing information on the expected environmental effectiveness of carbon taxes reduces the demand for environmental earmarking making distributional effects salient generates an important demand for progressive designs e g social cushioning or recycling via lump sum transfers the case of lump sum recycling is particularly striking it is sufficient to show its desirable distributional properties to make it one of the most preferred designs which corresponds to a completely novel result in the literature we show that providing detailed information on the functioning of environmental taxes may contribute to close both the gap between acceptability ex ante and ex post and the gap between economists prescriptions and the preferences of the general public

are income and consumption taxes ever really equivalent evidence from a real effort experiment with real goods abstract the public finance literature demonstrates the equivalence between consumption and labor income wage taxes we introduce an experimental paradigm in which individuals make real labor leisure choices and spend their earned income on real goods we use this paradigm to test whether a labor income tax and an equivalent consumption tax lead to identical labor leisure allocations despite controlling for subjects work ability and inherent labor leisure preferences and disallowing saving subjects reduce their labor supply significantly more in response to an income tax than to an equivalent consumption tax we discuss the economic implications of a policy shift to a consumption tax

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

a panel data based method for merging joint space and market response function estimation multidimensional scaling mds techniques have proven to be useful in understanding market structures at a single point in time in addition to examining snapshots of markets it has been suggested that the construction of longitudinal joint spaces in conjunction with econometric modeling techniques would provide useful insights into the dynamic structure of a market however several pragmatic factors related to data collection have limited the amount of research in this area in this paper a method is proposed that enables researchers to use commonly available consumer diary panel data to construct a time series of joint space maps and then to integrate these maps into market response models two illustrations using longitudinal maps demonstrate successful applications of this methodology

time delay complexity and support for taxation people often experience the benefits of taxation over time we design an intertemporal market experiment with negative externalities to examine how delaying the benefits of taxation affects support for taxes we find that when negative externalities occur immediately people learn to adopt pigouvian taxes which are aimed at reducing negative externalities and restoring market efficiency by contrast when negative externalities are delayed people are less receptive to taxation this effect persists over time our data reveal that the strong negative delay effect can be explained in large part by narrow bracketing and the increased perceived complexity of the environment rather than by time discounting per se we argue and demonstrate that increasing the transparency of intertemporal tradeoffs can effectively promote support for taxation

accepting market failure cultural worldviews and the opposition to corrective environmental policies abstract to explore whether and why people sometimes reject environmental policies that improve individual and collective outcomes we create an experimental market in which transactions generate a negative externality market participants endogenously determine whether to implement corrective policies we consider three policy instruments pigouvian taxes and subsidies and quantity regulation and two levels of policy efficiency full and half we then explore how individual cultural worldviews might contribute to the rejection of policies that correct the market failure our results indicate that people often oppose policies that improve their material outcomes and we find that such opposition is significantly explained by cultural worldviews interesting connections emerge between individual worldviews and specific policy instruments

a model of stochastic variety seeking in this paper we propose and test a stochastic model of consumer choice that incorporates attribute based variety seeking our stochastic variety seeking model svs has nested within it a fixed variety seeking model a zero order model of choice and a first order pure variety model we compare the svs model to alternative models under stochastic variety seeking we examine the nature of the variety sought and provide a test of the satiation hypothesis unlike fixed variety seeking models our model allows variety seeking to vary in intensity and consistency over individuals as well as over purchase occasions we show that the model is equivalent to a random utility model with the features that the attributes of brands relative to those of the brand previously bought influence choice and the extent of variety seeking is random over choice occasions for a given individual the model permits a closed form solution to the conditional switching probabilities parameterized by variety seeking parameters and dependent on brand attributes we apply our model to individual choice data obtained from a field study specifically designed for the purpose at hand

speed of replacement modeling brand loyalty using last move data abstract the authors study brand loyalties for durable goods using automobile survey data that are peculiarly censored and track only elapsed times since transitions but not the transition times themselves this censoring problem is typical of commercially available durable goods survey data however little attention has been paid to such last move data in the statistics or marketing literature on the analysis of transition times the authors propose a multistate continuous time nonstationary markov model with a parsimonious brand loyalty structure and also propose an estimation approach to recover the parameters of the proposed model using the automobile survey data the proposed model fits observed brand choice outcomes even better than a model with a fully unrestricted and therefore highly parameterized transition structure the authors also obtain several substantive findings for example chrysler is significantly weaker than general motors and ford insofar as it has the lowest brand loyal

the generalized theory of transfers and welfare bilateral transfers in a multilateral world paul samuelson s 1952 1954 classic papers on the transfer problem addressed two separate analytical issues the positive effect of a transfer on the terms of trade and the welfare effect of the transfer on the donor and the recipient since then a considerable body of literature has grown up on the positive analysis while samuelson 1954 himself had extended the 2 x 2 x 2 free trade analysis to allow for tariffs and transport costs subsequent writers have analyzed other extensions of the model for example to allow for nontraded goods as with leisure in samuelson 1971 or general nontraded goods in john chipman 1974 and ronald jones 1970 1975 remarkably however the welfare analysis of transfers has not paralleled these developments since wassily leontief 1936 produced an example of immiserizing transfer from abroad and samuelson 1947 argued that the example required market instability the proposition that has monopolized attention has been that a transfer in the conventional 2 x 2 x 2 model in its free trade version cannot immiserize the recipient or enrich the donor as long as world markets are stable in the walras sense interestingly samuelson 1954 who did extend the positive analysis to include tariffs did not go on to ask whether immiserization of the transfer recipient and hence symmetrically enrichment of the donor in a two country model could now arise consistent with market stability recently the welfare analysis of transfers has been extended in two different directions both apparently unconnected and both yielding the conclusion that transfers from abroad can be immiserizing and that the donor may improve its welfare despite market stability one route to this conclusion has been the introduction of a third economic agent or country that is outside of the transfer process in the appendix of his 1960 paper analyzing the interaction between trade policy and income distribution harry johnson discussed the possibility of welfareparadoxical redistribution between two factor income classes capital and labor in an open economy thereby providing what can be interpreted as a treatment of the threeagent transfer problem for the case in which donor and recipient are both completely specialized in the ownership of a single different factor an independent analysis of the three agent transfer problem using a restrictive model with given endowments of goods and fixed coefficients in consumption was also undertaken in an important paper by david gale 1974 2 brecher and bhagwati bhagwati department of economics columbia university new york ny 10027 brecher department of economics carleton university ottawa on kis 5b6 hatta department of political economy the johns hopkins university baltimore md 21218 we thank the national science foundation grant no 524718 for partial financial support of the research underlying this paper the paper was written when brecher and hatta were visiting columbia university 1981 82 gratefully acknowledged are helpful comments and suggestions from john chipman avinash dixit jacques dreze robert feenstra jacob frenkel ronald jones murray kemp andreu mas colell michael mussa john riley lars svensson and robert willig from anonymous referees and from seminar participants at berkeley harvard minnesota rochester chicago and the university of california los angeles after the present paper was submitted for publication and following its presentation at rochester our attention was drawn to this appendix which was noticed by a student of ronald jones subsequently we learned from makoto yano that motoshige itoh had pointed out an important related paper by ryuotaro komiya and t shizuki 1967 whose condition 11 for the johnson case anticipated our equation 12 below we are grateful for having both of these references brought to our attention 2 gale constructs an example in which the donor is enriched along with the recipient furthermore this immediately implies that a reverse transfer will immis

empirical generalizations about market evolution and stationarity we present empirical generalizations about conditions under which marketing variables evolve or remain stationary we first define evolution statistically and make the case why it is an important concept for increasing our understanding of long run marketing effectiveness we then briefly review ways in which evolution can be tested empirically from readily available data we present a database of over 400 prior analyses and catalog the relative incidence of stationarity versus evolution in market performance and marketing spending we find that evolution is the dominant characteristic for sales and marketing mix spending but that stationarity is the dominant characteristic for market share thus we find strong support for the conjecture that many markets are in a long run equilibrium where the relative position of the players is only temporarily disturbed by their respective marketing activities we assess the impact of a number of covariates on the likelihood of finding stationarity evolution in sales

product assortment in a triopolgy producers of super premium ice cream such as haagen dazs offer a smaller assortment of flavors than the producers of lesser quality ice cream examples of this phenomenon can be found in other industries as well in many industries the producers of higher quality products offer a smaller assortment of flavors colors sizes patterns textures fragrances tones styles models designs types or other options this paper explores when and why producers of super premium products should find it profitable to offer a smaller assortment than the producers of nonpremium products we derive a nash equilibrium both on prices and product assortments for a triopoly at the nash equilibrium we show that additional product quality increased consumer price sensitivity and greater assortment costs discourages product assortment we also show that a larger market potential greater competitive costs and sharper competition encourage more assortment by the super premium producer

papers in experimental economics competitive market institutions double auctions vs sealed bid offer auctions consider a market with the following characteristics 1 privacy that is each agent knows only his own valuation or cost conditions 2 exchange follows the rules of the oral double auction that is buyers freely announce bids or accept offers and sellers freely announce offers or accept bids 3 aggregate market supply and demand per trading period is stationary for at least two to three periods and 4 there are at least four buyers and as many sellers the literature reporting the results of a large number of experimental markets with these characteristics documents what appears to be a remarkably rapid convergence to a competitive equilibrium ce however any claim of double auction da convergence to the ce can only have meaning in one of three senses i the ce is attained immediately ii after t periods of trading some measure of the market s state such as mean price is nearer relative to experimental sampling variability to a ce than to some distinct alternative equilibrium such as a monopoly or nash equilibrium iii after t periods of trading this measure is nearer to a ce in da experimental markets than in markets organized under a different institution of contract for example a sealed bid auction since everything from electrons and the stars to rats and people yield state measures subject to error or random variation the deterministic criterion i can have no serious scientific standing by such criteria any hypothesis can be rejected and there could be no science of physics biology or economics 2 with the exception of certain very simple markets such as single object auctions or certain idealized markets such as the cournot quantity adjuster model economics has only two concepts of equilibrium monopoly and competitive the only formal model of da trading that has been proposed see david easley and john ledyard p 6 predicts stochastic convergence in finite time with probability one to a ce hence the only test alternative to the ce research hypothesis in da markets is a monopoly or monopsony equilibrium experimentalists have not reported statistical tests of the ce professor department of economics university of arizona assistant professor department of economics indiana university instructor department of economics university of arizona and sandia national laboratories albuquerque nm respectively we are indebted to the national science foundation for research support and to art denzau and mort kamien for helpful comments there is an early and recently growing body of experimental evidence for convergence to a competitive equilibrium under double auction rules the earliest evidence contained in experiments initiated in january 1956 is reported in smith 1962 1964 1965 1976 however these early experiments used between twenty and fifty or so participant buyers and sellers because in keeping with prevailing professional beliefs it was thought that a ce was unlikely to be approached unless numbers were quite large using large numbers was not unreasonable since it is a good beginning procedure to give a theory whatever is believed to be its best shot more recent evidence using six buyers six sellers and two traders in speculative da markets with cyclical demand is reported by r m miller charles plott and smith and williams 1979 for evidence from a comparison of oral and computerized da experiments with four buyers and four sellers see williams 1980 for further evidence in the context of the study of price controls see m isaac and plott 1981b and smith and williams 1981b in the context of a conspiracy study see isaac and plott 1981a in the context of comparisons between da and posted offer pricing see jon ketcham smith and williams in the context of a study of four variations on da rules see smith and williams 1980 all of these more recent papers report double auction experiments using no more than four buyers and four sellers 2as frederick mosteller once noted if you wanted to reject the inverse square law of attraction try tossing a sheet of paper out the window

the effects of cross ruff coupons on sales and profits cross ruff coupons are obtained at the time of purchase of a carrier brand and may be redeemed at a later date on a target brand these coupons therefore have the ability to link consumer purchases across different brands as well as shopping trips we model the effects of cross ruff coupons on consumer choice behavior and derive the conditions under which cross ruff coupons can lead to higher sales and profits than other types of package coupons the model also provides insights into the selection of appropriate carrier and target brands and on how the choice of an appropriate carrier or a target brand is affected when the categories that these brands belong to are demand complements or substitutes we conduct an empirical analysis using data from 195 different cross ruff coupon campaigns observed in grocery stores in a major u s city over a three month period the data are consistent with the key insights provided by the model

attitudes towards carbon taxes across europe the role of perceived uncertainty and self interest abstract while using carbon taxes to reduce greenhouse gas emissions may well be effective this has recently proved too unpopular to put into practice in a number of countries yet at a time when governments across the world are preparing their nationally determined contributions to the paris agreement our knowledge of whether and why people oppose these taxes originates from a single or small number of cases drawing on the european social survey n 44 387 this article provides evidence on public attitudes towards increasing taxes on fossil fuels to reduce climate change from 23 countries most of which have never featured in the literature before the results point to a widespread aversion to carbon taxes on the one hand this worsens with the perceived costs of taxes such as the case among consumers who depend highly on energy on the other it improves with political trust and external political efficacy factors that help ease the uncertainty around policy proposals our estimations suggest that the effect of changes in these factors alone would be large enough to reverse the public resistance to carbon taxes in some countries these results are robust to a number of alternative specifications and various checks

predicting utility under satiation and habit formation we introduce a modification of the discounted utility model that accounts for both satiation and habit formation in intertemporal choice preferences depend on the satiation level and the habitual consumption level these two state variables together with the shape of the value function drive the properties of the model one unique feature of our model is that it addresses the trade off between seeking variety and maintaining acquired habits we examine several properties of our model such as the nontrivial patterns of desirability willingness to pay for an additional unit of consumption or the effect of abstaining from consumption craving we explore the shape of optimal consumption patterns in discrete and continuous choice settings if subjects underestimate the changes in satiation and habituation levels as occurs under projection bias our model explains why people buy more when hungry or prefer variety in advance of consumption but stay with the same consumption good in actual use

variety seeking through brand switching a concept of variety seeking behavior is modeled as a stochastic brand choice model the model yields a measure of variety seeking for each individual consumer panel data for 28 products are analyzed for each household and the possibility of market segmentation by variety seeking behavior is explored

order in product customization decisions evidence from field experiments differentiated product models are predicated on the belief that a product s utility can be derived from the summation of utilities for its individual attributes in one framed field experiment and two natural field experiments we test this assumption by experimentally manipulating the order of attribute presentation in the product customization process of custom made suits and automobiles we find that order affects the design of a suit that people configure and the design and price of a car that people purchase by influencing the likelihood that they will accept the default option suggested by the firm

removing heterogeneity bias from logit model estimation this paper introduces a new estimation procedure for the logit model that is an extension of a conditional estimation procedure developed by chamberlain chamberlain g 1978 on the use of panel data working paper harvard university 1 52 chamberlain g 1980 analysis of covariance with qualitative data rev econom stud 47 225 238 the method eliminates heterogeneity bias which is present in the estimates produced by traditional estimation techniques it improves the goodness of fit and explanatory power of these models while incorporating purchase event feedback

technical note aggregating individual purchases to the household level household level panel data are the input for many types of marketing studies an interesting but until now unaddressed question is what is the effect of aggregating individual members purchases to the household level under standard assumptions the answer is unambiguous the household brand switching pattern looks more zero order than the typical individual family member s behavior when the standard assumptions are relaxed the overall spirit of the results do not change these conclusions give comfort to those who use brand switching data to partition product categories those looking for variety seeking behavior from household data are given some cause for concern as well as reasons for reinterpreting previous studies

estimation of latent class models with heterogeneous choice probabilities an application to market structuring recently grover and srinivasan developed a latent class based approach to analyze market structure by using brand switching data the authors provide an iterative maximum likelihood procedure for

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

an investigation into the order of the brand choice process this paper investigates the order of the brand choice process at the individual family level using a variety of tests t likelihood ratio binomial runs and multinomial runs tests the test of stationarity developed permits separate analyses for stationary and nonstationary purchase sequences our analyses indicate that the purchase sequences of a majority of stationary consumers are consistent with the zero order assumption this result is observed for all the nine frequently bought packaged goods studied with the use of panel data and for a product category soft drinks using experimental data

positioning and pricing in a variety seeking market we study competitive positioning and pricing strategies in markets where consumers seek variety variety seeking behavior is modeled as a decrease in the willingness to pay for the product purchased on the previous purchase occasion using a three stage hotelling type model we show that the presence of variety seeking consumers reduces product differentiation offered in equilibrium thereby explaining some otherwise counterintuitive findings in empirical research we find that firms charge higher prices in period 1 and lower prices in period 2 the lower price in period 2 represents the price incentive that firms need to offer to prevent the variety seeking consumers from switching furthermore we find that the observed switching in a market may not fully capture the true magnitude of the underlying variety seeking tendencies among consumers finally we show that the presence of variety seeking consumers leads to lower firm profits and a higher consumer surplus surplus increases for variety seeking consumers as well as regular consumers therefore the presence of variety seeking consumers benefits everyone in the market

testing for choice dynamics in panel data this article applies different approaches to distinguish state dependence from unobserved heterogeneity and serial correlation and hence test for state dependence in consumer brand choices first we apply a simple method proposed by chamberlain which involves lagged exogenous variables only second we also estimate a lagged dependent variable specification proposed by wooldridge third we use the estimation approach suggested by wooldridge to estimate a model with both lagged dependent and exogenous variables to distinguish between the two different sources of choice dynamics state dependence and lagged effects of the exogenous variables our analysis reveals that the best approach is to use models with both lagged dependent and exogenous variables our findings include strong evidence for state dependence in five out of the six product categories studied in this article

competitive market structures a subset selection analysis market structure models are used to identify submarkets or to test for the presence of submarkets where within group competition is much stronger than across group competition the implicit assumption in such models is that the brands in a submarket compete on the basis of their shared product features however if significant variety seeking effect exist in the market such an assumption may not be valid we present a model based on a subset selection procedure for analyzing competitive market structures and develop tests of significance for variety seeking effects present in the market for each brand in the market the subset selection procedure identifies sets submarkets of brands that are in close competition the competitive market structure is defined by the possibly overlapping submarkets that are identified for each brand and the model provides insights on whether the brands in a submarket are of a reinforcing or a variety seeking kind the application of our model to two different consumer packaged goods markets highlights its contribution relative to extant methods

a multivariate polya model of brand choice and purchase incidence in this paper we develop an integrated stochastic model of purchase timing and brand selection which incorporates the influence of marketing mix variables seasonality and trend and also allows for various individual choice mechanisms our approach rests on the assumptions of a zero order choice process a poisson timing process and purchase rates following a multivariate gamma distribution over the population the scale parameters of which vary according to marketing activities and time the resulting model is a multivariate polya process and the distribution of brand choice probabilities turns out to be a generalized dirichlet distribution thus most currently used zero order models can be considered to be special cases of this approach furthermore we derive a number of market diagnostics which provide insights into market structure and demonstrate the model s use for marketing strategy simulation based on extensive testing of the underlying hypotheses we finally validate the model using empirical data and show that it fits the market in question

welfare aspects of the transfer problem using the standard trade model with three countries and allowing for substitutability in both production and consumption this paper demonstrates that a country may gain by giving a transfer that the receiver may lose and that these two phenomena may appear at the same time this result is an extension of gale s example in a fixed coefficient model where he shows both transferer and transferee may become better off harming the third country and it is contrasted with the traditional welfare proposition whereby a giver is immiserized and a recipient is enriched

optimal pricing of environmental and natural resource use with stock externalities abstract underlying some of the most pressing environmental problems are the interlinked resource and environmental stock externalities with threshold effects using a simple dynamic model it is shown how in the face of such externalities the static market based policy instruments such as pigouvian taxes should be modified it is shown that even if for an initial period there is going to be no pollution stock damage the optimal policy still requires that abatement begins immediately and at increasing rates simulation of the model for the case of fossil fuel burning and the consequent global warming shows that the optimal carbon tax and therefore the optimal control strategy is particularly sensitive to changes in the marginal abatement cost and the level of fossil fuel demand policy simulations contrast the optimal control policy with and estimate the welfare losses from alternative policies deriving from arbitrary tax paths the latter include i a no tax policy ii a constant carbon tax rate iii the european community s proposed carbon tax path and iv a delayed optimal tax path

niching versus change of pace brands using purchase frequencies and penetration rates to infer brand positionings the authors examine deviations from ehrenberg s wi 1 bi equal to a constant law to infer the positioning of low share brands as niche versus change of pace brands results from empirical anal

shrouded attributes consumer myopia and information suppression in competitive markets bayesian consumers infer that hidden add on prices e g the cost of ink for a printer are likely to be high prices if consumers are bayesian firms will not shroud information in equilibrium however shrouding may occur in an economy with some myopic or unaware consumers such shrouding creates an inefficiency which firms may have an incentive to eliminate by educating their competitors customers however if add ons have close substitutes a curse of debiasing arises and firms will not be able to profitably debias consumers by unshrouding add ons in equilibrium two kinds of exploitation coexist optimizing firms exploit myopic consumers through marketing schemes that shroud high priced add ons in turn sophisticated consumers exploit these marketing schemes it is not possible to profitably drive away the business of sophisticates it is also not possible to profitably lure either myopes or sophisticates to nonexploitative firms we show that informational shrouding flourishes even in highly competitive markets even in markets with costless advertising and even when the shrouding generates allocational inefficiencies

try it you will like it does consumer learning lead to competitive price promotions there is strong evidence that consumers learn from their brand consumption experiences and continuously update their brand purchase probabilities however in explaining why established competitive brands continuously compete through periodic price promotions most of the existing theories do not attribute this phenomenon to underlying consumer learning yet try it you will like it is often the stated rationale of the practicing marketing manager in offering consumers a price promotion on a brand this paper examines the connection between consumer learning and the offering of price promotions the consumer model specified is markovian in nature and encompasses in addition to consumer learning other empirical findings such as the increase in product class consumption in response to price reductions the consumer models used in the existing game theoretic approaches to this problem are shown to be mostly special cases of the proposed model it is demonstrated that for the commonly used price response functions the existence of consumer learning at a level of intensity consistent with that identified in empirical works makes it optimal for competing brands to periodically offer price promotions moreover it is shown that the competing brands should promote in different periods as opposed to head to head

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

competitive response and equilibria this paper investigates the relationship between market share and promotional expenditures the long run using data that span a decade and 91 product categories we find that market shares are stationary for a majority of the products in the data base we find that relative promotional expenditures for the products are offsetting in the long run finally for products whose market shares show a trend it is difficult to discern the impact of relative promotional expenditure on the evolution of market share this result generalizes the empirical finding of bass et al bass f m m m givon m u kalwani d reibstein g p wright 1984 an investigation into the order of the brand choice process marketing sci 3 4 267 287 that offsetting competitive activity plays a role in the maintenance of what appears to be stationary and zero order behavior

time discounting for primary and monetary rewards this paper reports a positive and statistically significant relation between short term discount rates elicited with a monetary and a primary reward chocolate the relation is most evident among people who like chocolate and are hungry this finding suggests that high short term discount rates are related to an underling individual trait consistent with models of presentbiased preferences

inequality and welfare in market economies abstract atkinson 1970 and kolm 1969 have shown how lorenz ranking of distributions of a fixed amount of income or a single commodity may correspond to social welfare rankings lower inequality indicates higher social welfare atkinson and bourguignon 1982 and kolm 1977 offer two ways of extending this result to multi commodity environments we investigate an alternative approach based on the existence of markets and market prices at which agents maximize utility our main result offers a welfare based method of making real national income comparisons which takes into account the distribution of individual welfare

technical note why does the nbd model work robustness in representing product purchases brand purchases and imperfectly recorded purchases one of the most managerially useful constructs that emerge from the stochastic modelling of brand choice is that of conditional expectations in this paper the conditional expectations are derived for a generalization of the nbd model called the beta binomial negative binomial distribution bb nbd model first described by jeuland bass and wright the model developed to jointly represent the product class purchase and brand selection processes is also particularly appropriate for analyzing panel data when not every purchase occasion is recorded the conditional expectations for the nbd model increase linearly with the number of previous purchases made by an individual therefore the degree of nonlinearity of the conditional expectations in our more complicated model allows us to assess the robustness of nbd results when in fact the basic assumptions are not true this paper gives the simple conditions when the nbd will exactly or approximately represent the bb nbd and describes the qualitative deviations between these two models when they are not identical

inferring the order of the choice process using consumer purchase histories the small sample properties of the multinomial runs mr test which is often used to test for effects of previous brand choices on current brand choice probabilities are explored in this article through a monte carlo study of different buyer level brand choice probability models the power and the actual size of this test under a null hypothesis of no previous brand choice effects are shown to depend on the nature of the true underlying model length of purchase history and skewness in baseline choice probabilities we provide some guidelines for when the mr test is more useful in empirical research

formal choice models in marketing the paper gives an overview and evaluates the theoretical traditions underlying choice models that are used in marketing in particular the emphasis of this essay is on the underlying assumptions limitations and empirical demands of these choice models four fundamental choice models are used as a basis to analyze this complex field the neoclassical economic theory as extended by lancaster the risk preference theory of choices under uncertainty the strict utility theory and the random utility theory these four choice models and their extensions are compared and contrasted along the three critical steps in the model building process theory generation parameterization and estimation

the continuing search for a popular tax for the next few years perhaps for a longer time federal tax policy will be inseparably intertwined with deficit reduction policy as a result tax decisions will be more closely related to spending decisions and attention will shift to new kinds of taxes for decades federal tax policy debates have been quite separate from debates over what these taxes are supposed to finance federal tax controversy has focused heavily on the major general revenue sources the individual and corporate income taxes economists have analyzed the effects of these levies on economic behavior and on the distribution of income and this analysis has played a considerable role in policy formulation the substantial reduction in marginal tax rates as well as base broadening indexing and changes in the treatment of depreciation and consumer interest were greatly influenced by the views of economists the frequency of recent changes in the income tax rules capped by the surprisingly comprehensive tax reform legislation of 1986 have left both politicians and tax reformers with little appetite for further tinkering with the income taxes moreover the continuing large deficits in the federal budget only partially offset by growing surpluses in the social security trust fund have forced policymakers to focus on a new aspect of an old problem how to get citizens to want less from their federal government or be willing to pay more for it

reference effects of price and promotion on brand choice behavior when consumers are exposed to pricing and promotional activity by frequently purchased packaged goods they may develop expectations that are used as points of reference in evaluating future activi

chapter 6 market share models publisher summary this chapter describes that three basic principles motivate the specification of the market share models market share models should be competitive descriptive as well as predictive and profit oriented being fundamentally competitive implies that one cannot know the effect or effectiveness of a marketing action without accounting for the actions of competitors market share models are models for understanding how the marketing efforts of every brand impact the results in a competitive marketplace only by describing the influence of each marketing instrument can one gain a basis for marketing planning prediction alone is not enough time series models that forecast the future from the past sales provide no insight into how sales are generated the emphasis on being descriptive also embraces the need to understand the areas in which consumer choice probabilities are synonymous with market shares as well part of the goal of description transcends what can be done by market share models alone managers need to understand that their efforts have potentially competitive effects and potentially market expansive effects in sales response models these effects are comingled but by combining descriptive market share models for the competitive effects with descriptive category volume models for the market expansive effects managers obtain a much richer understanding of the market the profit oriented goal of market share analysis urges us to ask how the firm s allocations of resources to aspects of the marketing mix produce bottom line results

narrow bracketing and dominated choices an experiment by tversky and kahneman 1981 illustrates that people s tendency to evaluate risky decisions separately can lead them to choose combinations of choices that are first order stochastically dominated by other available combinations we investigate the generality of this effect both theoretically and experimentally we show that for any decisionmaker who does not have constant absolute risk averse preferences and who evaluates her decisions one by one there exists a simple pair of independent binary decisions where the decisionmaker will make a dominated combination of choices we also characterize as a function of a person s preferences the amount of money that she can lose due to a single mistake of this kind the theory is accompanied by both a real stakes laboratory experiment and a large sample survey from the general u s population replicating tversky and kahneman s original experiment where decisionmakers with prototypical prospect theory preferences will choose a dominated combination we find that 28 of the participants do so in the survey we ask the respondents about several hypothetical large stakes choices and find higher proportions of dominated choice combinations a statistical model that estimates preferences from the survey results is best fit by assuming people have utility functions that are close to prospect theory value functions and that about 83 of people bracket narrowly none of these results varies strongly with the personal characteristics of participants we also demonstrate directly that dominated choices are driven by narrow bracketing when we eliminate the possibility of narrow bracketing by using a combined presentation of the decisions the dominated choices are eliminated in the laboratory experiment and are greatly reduced in the survey

performance regimes and marketing policy shifts even in mature markets managers are expected to improve their brands performance year after year when successful they can expect to continue executing on an established marketing strategy however when the results are disappointing a change or turnaround strategy may be called for to help performance get back on track in such cases performance diagnostics are needed to identify turnarounds and to quantify the role of marketing policy shifts in this process this paper proposes a framework for such a diagnosis and applies several methods to provide converging evidence for two main findings first contrary to prevailing beliefs the performance of brands in mature markets is not always stable instead brands systematically improve or deteriorate their performance outlook in clearly identifiable time windows that are relatively short compared to windows of stability second these shifts in performance regimes are associated with the brand s marketing actions and policy shifts as opposed to competitive marketing promotion oriented marketing policy shifts are particularly potent in improving a brand s performance outlook

effects of price promotions on variety seeking and reinforcement behavior a stochastic model is proposed to examine how changes in frequency of price discounts affect brand choice decisions of consumers who exhibit variety seeking and reinforcement behavior it is shown that the effect on choice depends on whether the brand offering discounts is a major or minor brand in the product category this model extends the existing literature on stochastic models of variety seeking behavior by explicitly incorporating switching due to promotions along with intrinsic switching due to variety seeking the model yields testable hypotheses which are supported in a laboratory experiment and on analyses of the iri cracker data

are we taxing ourselves how deliberation and experience shape voting on taxes abstract we let consumers vote on tax regimes in experimental markets we test if taxes on sellers are more popular than taxes on consumers i e on voters themselves even if taxes on sellers are inefficiently high taxes on sellers are more popular if voters underestimate the extent of tax shifting in the market we show that inexperienced voters are prone to such a tax shifting bias that experience is an effective de biasing mechanism but that pre vote deliberation about tax regimes makes initially held opinions more extreme rather than correct our results suggest that voting on taxes is prone to bias and that easy to interpret facts are needed to de bias voters

vertical differentiation with variety seeking consumers we analyze price and quality competition in a vertically differentiated duopoly in which consumers have a preference for variety the preference for variety is a consequence of diminishing marginal utility for repeated experiences with the same product we find consumer variety seeking can either soften or intensify price competition depending on the difference in firm qualities and the strength of consumer preference for variety when the qualities are similar or the consumer preference for variety is strong prices and profits are higher than would be obtained in the absence of variety seeking on the other hand if qualities differ enough or the preference for variety is weak stronger preferences for variety are associated with more intense price competition and lower profits when firms set their qualities before competing on price and the range of feasible qualities is restricted such that variety seeking softens competition competing firms choose to minimally differentiate themselves from each other the preference for variety can drive the firms to offer multiunit discounts and the greater price flexibility from these discounts does not necessarily reduce profits relative to simple unit pricing this paper was accepted by j miguel villas boas marketing

flexibility in consumer purchasing for uncertain future tastes consumers often simultaneously purchase multiple units in the same product category whether they are best off purchasing an assortment of alternatives or an equal number of one alternative is addressed in this paper models of an expected utility maximizing consumer are developed and it is shown that an assortment may have greater expected utility than an equal number of any one alternative the rationale is that the assortment allows the consumer to choose from inventory the alternative most appropriate for a consumption occasion using preference information not available at the purchase occasion it is also shown that when consuming alternatives from inventory the consumer may forego the alternative offering the most utility in the expectation that it will yield even more utility in the future

dynamic free riding with irreversible investments we study the markov equilibria of a model of free riding in which n infinitely lived agents choose between private consumption and irreversible contributions to a durable public good we show that the set of equilibrium steady states converges to a unique point as depreciation converges to zero for any level of depreciation moreover the highest steady state converges to the efficient level as agents become increasingly patient these results are in contrast to the case with reversible investments where a continuum of inefficient equilibrium steady states exists for any level of depreciation discount factor and size of population

consumer learning brand loyalty and competition in several markets consumers can gain further information regarding how well a product fits their preferences only by experiencing it after purchase this could then generate loyalty for the products tried first this paper considers a model in which consumers learn in the first period about the product they buy and then make choices in the second period about the competing products given what they learned in the first period the paper finds that if the distribution of valuations for each product is negatively positively skewed a firm benefits is hurt in the future from having a greater market share today the brand loyalty characteristic with negative skewness two effects are identified on one hand marginal forward looking consumers are less price sensitive than myopic consumers and this is a force toward higher prices on the other hand forward looking firms realize that they gain in the future from having a higher market share in the current period and compete more aggressively in prices for similar discount factors for consumers and firms the latter effect dominates the paper also characterizes the importance of consumer learning effects on the market outcome

broad and narrow bracketing in gift certificate spending abstract we survey 1050 consumers who have just redeemed one or more open loop gift certificates to learn whether they view gift certificate income cash gifts and non gift income as substitutes we find that the majority 83 of recipients spend the certificates in the same way as cash the other respondents 17 bought an item they would not have bought otherwise but adjustments in their shopping pattern do not seem to result from constraints in redeeming the certificates 80 of all respondents in this group says they have used the certificate to buy an item they really love to have while inconsistent with standard microeconomic demand theory this behavior can be explained by narrow bracketing in spending gift certificates these consumers consider a limited choice set of nice personal items our data show that females are more likely to narrow bracket gift certificate income and that positive reciprocity towards the giver induces narrow bracketing in case the giver is a household member who suggests to buy a particular item using the certificate previous studies have found that both giving in kind gifts waldfogel 1993 as giving gift cards offenberg 2007 entail a welfare loss of 10 30 when compared to giving cash we find that the welfare effects of open loop gift certificates among users are limited the consumption of broad bracketing consumers is unaffected and narrow bracketing consumers seem to value the possibility to separate gift certificate income from other income sources

do you not like pigou or do you not understand him tax aversion and revenue recycling in the lab tax aversion reduces the likelihood that price rationing can be a politically viable tool for environmental protection we examine the case of the classic pigouvian tax to control a negative externality and consider how recycling the revenues labeling of the tax and information about its purpose affects the support for taxation we test the support for taxation within a single price market experiment in which purchases by some buyers impose external costs on others observing behavior consistent with tax aversion we also find that recycling the revenues to more narrowly targeted groups seems to increase support for taxation in the absence of narrow revenue recycling labeling a pigouvian instrument as a tax may significantly lower the likelihood of voter support

transfers the terms of trade and capital accumulation in the context of a two sector overlapping generations model it is demonstrated that a steady state transfer paradox may arise under commodity trade with stability and without distortions or bystanders the existence of the paradox is due to the effect of the transfer on world capital accumulation which is shown to always i e for any ranking of factor intensities and savings rates improve the donor s terms of trade transfers may also improve steady state welfare for both donor and recipient and produce paradoxical welfare results along the transition path la litterature en statique du commerce international a conclu que en l absence de distorsions ou de tierces parties les mouvements des termes d echange induits par les transferts ne peuvent pas etre suffisamment importants quand il y a stabilite walrasienne pour engendrer le paradoxe du transfert on a tire la conclusion de modeles dynamiques a un secteur que le paradoxe du transfert est possible mais en comptant sur la mobilite internationale du capital et sur les mouvements dans le niveau mondial du taux d interet plutot que sur les prix et les marches des biens dans un modele dynamique a deux secteurs ou les generations se chevauchent ce qui permet des effets a la fois statiques et intertemporels dans les termes d echange le commerce des biens peut engendrer un paradoxe du transfert en regime permanent quand il y a stabilite walrasienne sans distorsions et tierces parties l existence du paradoxe est attribuable a l effet du transfert sur l accumulation du capital qui toujours pour tout ordre des intensites de facteur et des taux d epargne ameliore les termes d echange du donneur les transferts peuvent aussi ameliorer le bien etre du donneur et du recipiendaire en regime permanent et produire des resultats paradoxaux de bien etre dans le sentier de transition

counting your customers compounding customer s in store decisions interpurchase time and repurchasing behavior abstract consumer buying decision is an important element of any company s efforts to count its customers stochastic models have been used extensively in previous studies of marketing and are usually constructed so as to easily fit the data and make predictions however the regularity of customer interpurchase time in store decisions and repeat buying behavior are not considered simultaneously in the literature since the empirical evidence suggests that all the above factors do indeed influence the firm s sales we here present a methodology which takes all these elements into account the methodology employed is illustrated by taking the customer purchase data for tea as an example by not eliminating light buyers the integrated model we developed achieves precise results and addresses the relative importance of each element while predicting firm sales

truth in concentration in the land of 80 20 laws among the more prominent truisms in marketing are 80 20 type laws e g 20 percent of the customers account for 80 percent of the purchases these kinds of statistics indicate a certain degree of concentration in customer purchases i e the extent to which a large portion of the product s total purchases are made by a small fraction of all customers such concentration levels suggesting that markets can be segmented in various ways are often reported in basic marketing texts we show that a meaningful interpretation of these concentration statistics is not nearly as easy or immediate as it is to compute them the key factors influencing the degree of apparent concentration in purchases are reviewed and we present a modeling approach for estimating the true level of relevant concentration among customers

reassessing brand loyalty price sensitivity and merchandising effects on consumer brand choice this article reports the results of an empirical study of household brand choices over four scanner panel data sets the study uses a random effects autocorrelated logistic regression model the analysis presents evidence that the brand choice process is not zero order in addition the influence of in store displays and feature advertisements on switching is shown to be about two to three times more effective than estimates obtained from previous studies finally the analysis indicates systematic differences between frequent and infrequent buyers of products in terms of their sensitivity to price displays and feature advertising

immiserizing growth in a many commodity setting abstract mathematical economists have recently shed new light on the phenomenon of immiserizing growth independently of the trade theoretic literature on this subject the present paper aims to build a beidge between the two literatures in particular mantel s set of sufficient conditions for non immiserizing growth is extended to a trade theoretic model with a smooth production frontier and bhagwati s trade theoretic set of sufficient conditions to an n commodity framework it is shown that the condition of normality in consumption in the former substitutes for the stability condition in the latter the concept of the semi compensated substitutability condition plays an essential role in our analysis

price competition in markets with consumer variety seeking we investigate price competition between firms in markets characterized by consumer variety seeking while previous research has addressed the effect of consumer inertia on prices there exists no research on the effects of variety seeking on price competition our study fills this gap in the literature using a two period duopoly framework as in klemperer s analysis of inertial markets we show that the noncooperative pricing equilibrium in a market with consumer variety seeking may be the same as the collusive outcome in an otherwise identical market without variety seeking specifically our variety seeking model implies tacit collusion between firms in both periods unlike the inertia model of klemperer that implies tacit collusion between firms only in the second period but implies fierce price competition in the first period when consumers are assumed to have rational expectations about future prices the implied first period prices increase further which is consistent with what klemperer finds in an inertial market to summarize while our variety seeking analyses support two key results pertaining to second period prices and rational expectations previously derived for inertial markets by klemperer they depart from one key result pertaining to first period prices

a probit model of choice dynamics there are many products which are repeatedly purchased by consumers in such cases it is likely that choice history that is the sequence of choices made in the past as well as marketing variables affect subsequent choice decisions attempts to model the effects of choice history have been generally based on the inclusion of variables that represent brand loyalty and or variety seeking behavior in this paper we present a model of dynamic choice behavior which is more general and incorporates four characteristics the first characteristic labeled preference reinforcement and preference reduction represents loyalty and variety seeking the second is the short term reluctance of a consumer to move from the current brand inertia or the willingness to move to another brand mobility the third characteristic captures the effect of repetitive consumption the long term effect on inertia and mobility the fourth characteristic incorporates the similarity or dissimilarity of choice alternatives this is important in a dynamic model because choice on the current purchase occasion can be affected by whether a similar or dissimilar alternative was chosen on the previous occasion similarities of alternatives are represented in terms of distances the effect of price on choice behavior is also modeled individual level purchase data from a consumer panel are used to estimate a covariance probit and an independent probit specification of the model from a substantive perspective the model gives interesting insights into the dynamics of choice behavior the model predicts switches better than a benchmark model which incorporates only loyalty in addition it is superior to three benchmark models in overall predictive ability

a general choice model for bundles with multiple category products application to market segmentation and optimal pricing for bundles abstract the attribute based approach to study customer choices cannot deal with bundles of heterogeneous components which are usually drawn from different product categories the authors develop the comparability based balance model which is a unified framework for modeling bundle choices the model can be employed for any bundle regardless of the heterogeneity of bundle components under a pure bundling strategy the conjoint model and balance model are special cases of the general model the authors use mixture distributions in a hierarchical bayesian framework to incorporate consumer heterogeneity in a more flexible manner than the extant approaches such as latent class and random coefficient models the empirical tests of the model show that most attribute effects are significant and consistent with the model s predictions the model is superior to those that do not consider the issues of comparability of attributes latent class structure and heterogeneity among respondents the authors show how

a model of balanced choice behavior in some product categories consumers appear to alternate among items in a consistent and purposeful though not entirely deterministic fashion such alternation occurs even in the absence of any apparent external influences on choice to explain such balanced choice behavior we present a model based upon the premise that past consumption influences the utility of items on subsequent choice occasions individuals may seek variety on certain product attributes and exhibit loyalty toward others the model specification yields a logit choice model which may be calibrated using consumption diary panel data at the individual or cross sectional level

capturing consumption flexibility in assortment choice from scanner panel data this study develops and estimates a model to empirically identify two behavioral effects namely consumption flexibility and state dependence that may underlie temporal and horizontal assortment choice using scanner panel data where consumption information is unavailable the proposed approach permits a consumer s consumption utility to be dependent on previous consumptions thus capturing state dependence both across purchase occasions and within horizontal assortments moreover consumers purchase and consumption decisions are modeled at two distinctive and sequentially related stages which allows for incorporating the effect of consumption flexibility the model is estimated on scanner panel data of yogurt purchase it is found that the two captured effects provide strong empirical support with face validity for the temporal and horizontal assortment choice patterns observed in the data the behavioral insights derived from estimating the proposed model can also be translated into significant managerial implications

externalities and corrective policies in experimental markets this paper reports on the behaviour of simple laboratory markets which have an externality experiences with these markets provide some help in answering two broad questions 1 do markets with externalities behave in accordance with the law of supply and demand 2 how do the pollution tax pollution standard and pollution licenses compare as methods for correcting the externality