unfixed resources perceived costs consumption and the accessible account effect consumption depletes one s available resources but consumers may be unaware of the total resources available for consumption and therefore be influenced by the temporary accessibility of resource accounts consistent with this possibility consumers in four experiments perceived a unit of consumption to be smaller and consequently consumed more when large resource accounts of money calories or time e g the money in their savings account were made temporarily accessible compared with when small resource accounts were made temporarily accessible e g the money in their wallet manipulating the cognitive accessibility of resources available for consumption influences both subjective judgment and behavior

is utility additive the case of alcohol the hypothesis of additive utility or preference independence is often applied to the demand for broad aggregates recent testing provides some evidence favourable to the hypothesis thus overturning the older results based on the standard asymptotic tests which are seriously biased against the null in small samples using data for seven countries and a variety of tests this paper shows that preference independence also cannot be rejected for more narrowly defined commodities beer wine and spirits the implications of the results for efficient taxation of alcoholic beverages are also explored

how price promotions influence postpurchase consumption experience over time the current research examines how price promotions influence postpurchase hedonic consumption experience on the one hand getting a good deal can elevate moods and dampen the pain of payment thus enhancing consumption enjoyment on the other hand discounts also reduce sunk cost considerations and the need to recover one s spending as a result price promotions can lower attention during consumption which in turn diminishes consumption enjoyment the authors posit that the time delay between payment and consumption plays an important role in determining the relative strength of these competing effects four experiments involving real spending and consumption demonstrate that when consumption occurs immediately after payment discounts make consumption more enjoyable however this pattern reverses when consumption is delayed the experiments provide support for the roles of feelings and attention respectively in accounting for these effects while ruling out several alternative explanations including perceived quality absolute paid price and a direct sunk cost account

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

understanding alcohol consumption across countries with unpublished data from the international comparison program that cover the consumption of three alcoholic beverages in over 150 countries we analyse drinking patterns around the world with an

biases in valuation vs usage of innovative product features we investigate biases in product valuation and usage decisions that arise when consumers consider a new generation of a product that offers an expanded set of capabilities of uncertain value two experiments using a novel computer game show evidence of a valuation usage disparity participants display a high willingness to pay for a new version of the game that offers a new set of controls but fail to fully exercise the option to use these controls after purchase this discrepancy is attributed to a fundamental difference in how new capabilities are valued at the time of purchase versus use consumer usage decisions appear to be driven by such myopic concerns as a desire to avoid short term learning costs whereas purchase decisions often fail to take into account the factors that drive usage and are further inflated by global optimism in the future usefulness of new capabilities we show that this lack of foresight can be explained by an intertemporal judgment model in which consumers attempt to value

paying too much and being happy about it existence causes and consequences of tariff choice biases abstract a common assumption underlying the analysis of consumers choices among optional tariffs is that consumers choose the tariff that maximizes their surplus and thus the tariff that leads to the lowest billing rate for a given amount of usage yet there is evidence that many users prefer a flat rate even though their billing rate would be lower with a pay per use tariff flat rate bias and some users prefer a pay per use tariff even though they would save money with a flat rate pay per use bias the authors conduct four empirical analyses based on three different data sets they show that the flat rate bias is more important and has a greater regularity and time persistence than the pay per use bias they classify potential causes of the flat rate bias as insurance effect taxi meter effect convenience effect and overestimation effect and show that the insurance the taxi meter and the overestimation effects lead to a flat rate bias they provide evidence that underestimation of usag

advertising and the us market demand for beer the us per capita market demand for beer is empirically estimated to determine the effect of advertising on the demand for beer the empirical results indicate that the most important determinants of demand are the price of beer the price of substitutes demographic factors and a light beer dummy variable the positive effects of income and lagged consumption appear to be small although many have argued that advertising promotes beer consumption the empirical results of this study do not support this hypothesis

alcohol control laws and the consumption of distilled spirits and beer this article tests the social marketing effectiveness of alcohol control laws designed to reduce the consumption of alcoholic beverages the study uses state level historical data to estimate the demand for distilled spirits and beer using economic sociodemographic and control law explanatory variables spirits and beer consumption are found to react differently to changes in economic sociodemographic and regulatory variables these differences suggest a consumer and product segment based approach to alcohol control laws or social marketing that emphasizes measures directed at youths for beer and at price for spirits

the demand for alcoholic drink in the united kingdom 1963 78 1983 the demand for alcoholic drink in the united kingdom 1963 78 applied economics vol 15 no 1 pp 125 140

the demand for home produced and imported alcoholic beverages in cyprus the aids approach the purpose of this paper is to investigate the demand and its composition between home produced and imported for alcoholic beverages in cyprus the methodological approach used is the almost ideal demand system aids both in static and dynamic terms empirically the aids both in its static and dynamic version was estimated using time series 1970 1992 for three sets of data which include 1 alcoholic beverages wine beer other brandies broken down between home produced and imported model a 2 alcoholic beverages only without disaggregation between home produced and imported model b and 3 aggregate alcoholic beverages wine beer other brandies and food model c zellner s iterative estimation procedure was used for estimating the model the empirical findings 1 strongly support the dynamic version of the aids over its static alternative and 2 provide certain guidelines concerning economic policies relating to an increase in government revenues and changing the composition between

dynamic almost ideal demand systems an empirical analysis of alcohol expenditure in ireland this paper presents a dynamic form of the almost ideal demand system aids three versions of the static aids model are employed to determine the preferred long run equilibrium model and represents the short run dynamics by an error correction mechanism this estimation procedure is then applied to alcohol expenditure in ireland the estimated point elasticities are consistent with previous studies and a priori expectations beer and spirits are found to be price inelastic in both the short and long run while wine is price inelastic in the short run and price elastic in the long run

paying not to go to the gym how do consumers choose from a menu of contracts we analyze a novel dataset from three u s health clubs with information on both the contractual choice and the day to day attendance decisions of 7 752 members over three years the observed consumer behavior is difficult to reconcile with standard preferences and beliefs first members who choose a contract with a flat monthly fee of over 70 attend on average 4 3 times per month they pay a price per expected visit of more than 17 even though they could pay 10 per visit using a 10 visit pass on average these users forgo savings of 600 during their membership second consumers who choose a monthly contract are 17 percent more likely to stay enrolled beyond one year than users committing for a year this is surprising because monthly members pay higher fees for the option to cancel each month we also document cancellation delays and attendance expectations among other findings leading explanations for our findings are overconfidence about future self control or about future efficiency overconfident agents overestimate attendance as well as the cancellation probability of automatically renewed contracts our results suggest that making inferences from observed contract choice under the rational expectation hypothesis can lead to biases in the estimation of consumer preferences

a microeconometric model analysis of us consumer demand for alcoholic beverages this paper discusses the specification and estimation of a two stage budgeting consumer demand for alcoholic beverages using 1987 88 usda individual and household food consumption survey data the upper level first stage budgeting decision is modelled via a gamma tobit model the lower level second stage budgeting allocates alcohol expenditure via a synthetic demand system for beer spirits and wine the synthetic system is constructed via a normalized linear combination of the level rotterdam cbs and an aids equivalent model data on individual three day alcohol consumption from the individual food intake survey are used for analysis while price and household characteristics information are obtained from the house hold food intake survey the results show that some individual and household characteristic variables as well as economic variables have significant impacts on consumer demand for alcoholic beverages

note extending the rotterdam model to test hierarchical market structures two issues that have implications across a firm s marketing activities are the estimation of the market response functions and the determination of the structure of the market in which its products compete in a recent paper clements and selvanathan clements k w e a selvanathan 1988 the rotterdam demand model and its application to marketing marketing sci 7winter 60 75 describe how the rotterdam demand system can be used to study these two issues in a joint framework in this note we extend their model to test hierarchical market structures using data at the brand form level we also incorporate idiosyncratic response coefficients that capture the effects of advertising and or other nonprice marketing mix variables separate from the effects of a price change these extensions provide additional insights into the nature and extent of competition among brands within a product class

trade ins mental accounting and product replacement decisions when a consumer who already owns a durable type product in a category faces the opportunity to upgrade to a new higher quality product the replacement purchase decision is driven by both normative economic factors and psychological factors as a normative decision maker s he considers the purchase price of the new alternative but s he additionally considers the mental cost of retiring the old product before s he has gotten his her money s worth out of it during ownership of a product a consumer mentally depreciates the initial purchase price thus creating a mental book value for the product the write off of this mental book value is felt as the mental cost of a replacement purchase based on the principles of mental accounting and mental depreciation i provide a theoretical explanation for this mental cost and why an individual s replacement purchase decision may be more sensitive to the mental cost than the marginal cost when applied appropriately mental accounting can serve a useful purpose

the demand for domestic and imported alcoholic beverages in ontario canada a dynamic simultaneous equation approach the purpose of this paper is to estimate simultaneously dynamic demand functions and consequently income and price elasticities for domestic and imported alcoholic beverages for the province of ontario the methodology used is the almost ideal demand system originally developed by deaton and muellbauer 1980 augmented by pollak s 1970 habit formation hypothesis the empirical application uses time series 1958 1987 for imported and domestically produced spirits wine and beer the findings provide strong support favouring the dynamic version of the almost ideal demand system over its static alternative but little evidence of strong substitution between domestic and imported products

the pricing practices of the liquor control board of ontario revisited box g e p and g m jenkins 1970 time series analysis forecasting and control san francisco holden day box g e p and g c tiao 1975 intervention analysis with applications to economic and environmental problems journal of the american statistical association 70 70 9 canada house of commons 5 june 1980 minutes of proceedings and evidence standing committee on miscellaneous estimates ottawa ministry of supply and services 16 december 1980 minutes of proceedings and evidence standing committee on miscellaneous estimates ottawa ministry of supply and services gregory a r and j g mackinnon 1980 where s my cheque a note on postal strikes and the demand for money in canada this journal 13 683 7 mitchell d j b 1981 collective bargaining and the economy j stieber et al eds u s industrial relations 1950 1980 a critical assessment madison wisc industrial relations research association statistics canada 1975 direct selling in canada cat no 63 218 ottawa information canada 1980 gross domestic product by industry cat no 61 213 ottawa ministry of supply and services 1981 gross domestic product by industry cat no 61 005 october ottawa ministry of supply and services

the bottom dollar effect the influence of spending to zero on pain of payment and satisfaction spending that exhausts a budget is shown to decrease satisfaction with purchased products relative to spending when resources remain in the budget six studies including those in which participants earn and spend real resources and evaluate real products explore this bottom dollar effect this research contributes to prior mental accounting research regarding how costs influence decision making e g bundling coupling sunk costs and to the satisfaction literature supporting the role of pain of payment in this process we show that the bottom dollar effect increases as effort required to earn budgetary resources increases decreases in the presence of windfall gains and decreases when there is less time between budget exhaustion and replenishment mediation analyses further demonstrate the role of payment pain in the bottom dollar effect implications are discussed in the context of behavioral research marketing promotions management and public policy

the effect of payment schemes on inventory decisions the role of mental accounting does the payment scheme have an effect on inventory decisions in the newsvendor problem keeping the net profit structure constant we examine three payment schemes that can be interpreted as the newsvendor s order being financed by the newsvendor herself scheme o by the supplier through delayed order payment scheme s and by the customer through advanced revenue scheme c in a laboratory study we find that inventory quantities exhibit a consistent decreasing pattern in the order of schemes o s and c with the order quantities of scheme s being close to the expected profit maximizing solution these observations are inconsistent with the expected profit maximizing model contradict what a regular or hyperbolic time discounting model would predict and cannot be explained by the loss aversion model instead they are consistent with a model that underweights the order time payments which can be explained by the prospective accounting theory in the mental accounting literature a second study shows that the results hold even if all physical payments are conducted at the same time suggesting that the framing of the payment scheme is sufficient to induce the prospective accounting behavior we further validate the robustness of our model under different profit conditions our findings contribute to the understanding of the psychological processes involved in newsvendor decisions and have implications for supply chain financing and contract design this paper was accepted by christian terwiesch operations management

consumption patterns in sri lanka a decomposition analysis knowing consumer reaction to changes in prices and income is important in formulating microeconomic policies such as public utility prices and commodity taxation this paper analyses the consumpti

cross section estimation of us demand for alcoholic beverage a flexible limited dependent variable model is used to examine us demand for alcoholic beverage parameterization and distributional assumptions of the double hurdle model cragg 1971 and tobit model tobin 1958 are rejected findings suggest that price income household composition and other characteristics have significant effects on alcohol consumption income and own price elasticities are significant but relatively small

is there a link between alcohol consumption and the level of poverty abstractin many developing countries in addition to household income there are a number of other socio economic determinants of poverty one such hidden socio economic factor is alcohol consumption and some studies argue that there is a link between alcohol consumption and poverty the main aim of this study is to measure the effects of alcohol consumption on the level of poverty in a systematic way using sri lanka as a case study this article demonstrates that the consumption of various types of alcoholic beverages particularly the illegal beverages has a significant positive association with the level of poverty the findings of this study suggest that in sri lanka the consumption of illegal alcoholic beverages increases the likelihood of being in a poor household by 2 3 the results of this study also find that households who are characterized as nonpoor but are just above the poverty line behave more like the poor rather than the nonpoor in terms of alcohol consumption some of the conclusio

economic and demographic factors in australian alcohol demand in the last two decades total pure alcohol consumption in australia has declined by about 31 and currently it is at the same level as it was in the 1950s australians consumed about 10 litres of pure alcohol per person in 1982 and now the level has declined to about 7 litres of pure alcohol per person during the last four decades per capita beer consumption has reached a peak of 140 litres in 1975 and has fallen to a low 93 litres in 1999 wine consumption has increased four fold while spirits consumption has stayed around the same level this paper using the australian consumption data for beer wine and spirits for the period 1956 1999 aims to explain the change in consumption patterns of beer wine and spirits by considering the effects due to changes in economic and demographic factors the results show that while income and prices significantly influence the consumption patterns of alcohol the increasing australian elderly population also plays an important role

the fewer the better number of goals and savings behavior abstract this article examines the effect of the number of goals on consumers savings behavior drawing from research on implementation intention the authors show that under certain conditions presenting a single savings goal leads to greater savings intention and actual savings than presenting multiple savings goals multiple goals typically evoke trade offs among competing goals and thus increase the likelihood that people will remain in a deliberative mind set and defer actions in contrast the authors propose and demonstrate that a single goal evokes a stronger implementation intention which in turn has a greater effect on behavior change they also show that the advantage of a single goal over multiple goals on saving is attenuated when saving is easier to implement or when the multiple savings goals are integrated rather than competing among themselves theoretical and practical implications are discussed

an investigation into the demand for alcoholic beverages in canada a choice between the almost ideal and the rotterdam models in this article i investigate the historical pattern of interactions in the demand for three categories of alcoholic beverages in canada using both the differential almost ideal and the differential rotterdam demand systems i evaluate these models based on several decision criteria including model encompassment based on the j test structural stability conformity with demand theory and the credibility of the estimated price and income responses in an attempt to determine which of these models is better suited for explaining the demand for alcoholic beverages the results reveal that both models satisfy the restrictions of demand theory and of structural stability but the rotterdam model is preferable on grounds of the remaining two criteria

the demand for alcohol in the united kingdom using the aids model we show that there exists for the uk a stable long run relationship between expenditure shares on beer cider spirits and wine alcohol prices total alcohol expenditure and a range of non economic variables relating to advertising licensing the employment social class and demographic characteristics of consumers and climate our estimates of key price and income elasticities generally lie between those found from other time series studies which exclude most of these non economic variables and those found from cross section studies which generally include them however the restrictions required for separability homegeneity and symmetry although not those for perfect price aggregation are decisively rejected

transaction decoupling how price bundling affects the decision to consume abstract in today s marketplace price bundling is widespread manufacturers and retailers routinely offer multiple products for a single bundled price although the effects of price bundling on purchase behavior have been well researched the effects of price bundling on postpurchase consumption behavior have received almost no attention in this article the authors build on the sunk cost literature e g thaler 1980 1985 and predict that price bundling leads to a disassociation or decoupling of transaction costs and benefits thereby reducing attention to sunk costs and decreasing a consumer s likelihood of consuming a paid for service e g a theater performance four studies show this to be the case in two lab studies the authors show that having a bundled four day ski pass as opposed to four one day ski tickets decreases a person s likelihood of skiing on the final day of a four day ski vacation they replicate this result in a field study showing that multiperformance ticket holders are

the demand for beer wine and spirits a systemwide analysis the systemwide approach to the analysis of consumer demand considers the multivariate structure of the problem in which the consumer allocates his income to all goods simultaneously this approach combines the theory of the consumer with empirical analysis and has enjoyed much popularity over the past decade for surveys of these developments see brown and deaton 1972 phlips 1974 powell 1974 theil 1975 76 1980 barten 1977 and theil and clements 1980 most previous applications of the systemwide approach have used national accounts commodity groups food clothing housing and so on for many business and government policy purposes however these groups are much too broad for example to analyze the effects on consumption of all but the simplest changes in indirect taxes we would need considerably more disaggregation similarly market researchers need to analyze demand at the individual product level for purposes of forecasting and formulating pricing and other policies the objective of this paper is to use the consumption of beer wine and spirits to illustrate how the approach can be apthis paper illustrates how the systemwide approach to consumer demand can be extended so that it can be applied to narrowly defined commodity groups we use the consumption of beer wine and spirits to show how the approach can be applied to estimate income and price elasticities of demand when the consumer s utility function is appropriately separable in alcoholic beverages and all other goods it is possible to confine our attention to the three beverages and ignore all other goods we use the demand model for a number of simulations designed to analyze the rapid growth of wine consumption we are indebted to john davis peter goldschmidt and kal stening for excellent research assistance to michael wohlgenant and henri theil for helpful comments and discussion and to the new south wales drug and alcohol authority for their partial financial support of this research

mergers brand competition and the price of a pint abstract mergers in the uk brewing industry have reduced the number of national brewers from six to four the number of brands in contrast has remained relatively constant we analyze the effects of mergers on brand competition and pricing brand level demand equations are estimated from a panel of draft beers to model brand substitution possibilities we estimate the matrix of cross price elasticities semiparametrically our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers in particular we compute equilibria of pricing games with different numbers of players

advertising and us alcoholic beverage demand system wide estimates the effects of advertising on consumption of alcoholic beverages in the us are analysed the goal is to obtain evidence on the importance of advertising at the level of beverage demand beer wine spirits and for total consumption of alcohol per capita gallons of ethanol a three equation conditional demand system is estimated that includes own and cros beverage advertising as explanatory variables four models of the differential demand system are estimated including the rotterdam aid cbs and nbr models using annual us data for the period 1964 90 on beverage consumption prices expednitures and real advertising estimates are obtained of the complete matrix of own and cross elascities for each beverage price and advertising at the beverage level the results indicate a positive butr very small effect of advertising on beverage consumption with most of the impact due to wine advertising and non due to beer advertising there is no efect of advertising in the composite demand function for al

close encounters of two kinds false alarms and dashed hopes people are frequently exposed to potentially attractive events that are subsequently and unexpectedly reversed and to potentially painful events which are also unexpectedly reversed in the process of being returned to the initial asset position does the sequence in which the positive and negative events occur matter this issue of the combined effect of pleasurable and painful stimuli has received scant theoretical or empirical attention we attempt to fill this lacuna in the literature by studying the retrospective evaluation of surprises that return individuals to their original economic state although such surprises do not change an individual s original economic state we argue that the individual s psychological state changes and the final affective state is among other things a function of the sequence in which the events occur from a theoretical standpoint several perspectives can be brought to bear on the issue for instance one reading of mental accounting based on prospect theory s value function would predict that losses should dominate gains and therefore regardless of sequence people should be unhappy when exposed to two economically equivalent outcomes of different signs conversely the literature on intertemporal choice would suggest that a series that ends on an up note is preferred to a series that ends on a down note because people like to defer gratification so that they may savor positive outcomes similarly people apparently have a preference for happy endings finally the extant literature on recency effects would predict that the last event in a series should have a disproportionate influence on overall affect our model relies on a shift in the reference point to explain how a surprising reversal of an event will lead to a nonzero evaluation of the sequence we suggest that people s reference points shift immediately but imperfectly after a stimulus is presented intuitively this implies that the first stimulus will shift the reference point in its direction as a result of which the evaluation of a sequence of events in which an initial event is unexpectedly reversed will be more favorable if the first event is a loss than if it is a gain this model captures the unanticipated nature of the second event i e the surprise element by allowing the first event to move the reference point consequently by the time the next event occurs the reference point has been updated as a result of which the zero economic outcome of the sequence yields nonzero utility we further posit that the magnitude of the reference point shift should be affected by the time elapsed between the two stimuli specifically the reference point shifts gradually with time until it is fully updated consequently the final affective state of the sequence is also a function of the temporal distance between the two events the main predictions of the model were empirically supported first in a survey using a mall intercept sample subsequently we conducted a study of student subjects involving a coin tossing game in which real money was at stake and in which subjects in one condition experienced the second outcome after a two day delay our results from this second study supported the model s prediction regarding the impact of the elapsed time between the events the experimental tasks involved surprising reversals of initial outcomes thus ensuring that savoring dread types of explanations which require that subjects anticipate the second event could not be operating finally in a series of three follow up studies we tested the claim that the magnitude of outcomes would have an impact on observed affect and consistent with our theory and contrary to recency predictions we observed similar results across different magnitudes while theoretically interesting we should also note that our research is of potential pragmatic significance people s reactions to a series of events is of considerable interest to marketers desirous of generating enhanced attitude affect purchase intention and the like without offering economic inducements such as rebates coupons or other costly discounts additionally public policy officials may be interested in protecting people from being manipulated into purchasing a product simply because of changes in the sequence in which a series of offers is made by the merchant

meat and fish consumption patterns in saudi arabia abstractthis study analyses the demand for meat beef chicken and lamb and fish in saudi arabia in a system wide framework using data for the period 1985 2010 a preliminary data analysis reveals that in saudi arabia the relative consumption of beef chicken and fish has a positive growth while lamb has a negative growth the average relative price growth rates of beef chicken and fish are negative while that of lamb is positive the expenditure shares of beef chicken and fish have increased while that of lamb has fallen the estimation results of the demand system reveal that there is an autonomous trend out of lamb into beef chicken and fish the implied income elasticities indicate that beef lamb and fish are considered to be luxuries while chicken is a necessity the demand for all meat products and fish are price inelastic these elasticities are key inputs for policy analysts in terms of devising policies in relation to meat production meat imports taxation and food security issues in s

cross country alcohol consumption comparison an application of the rotterdam demand system this paper analyses the consumption patterns of the three beverages beer wine and spirits in nine countries australia canada finland japan new zealand norway sweden the uk and the us using the rotterdam demand system a cross country comparison of the results shows that in most countries i wine consumption has grown at a fasteer rate than beer and spirits ii the proportion of consumers expenditure on alcohol is declining iii beer is a necessity and spirits is a luxury iv the demand for the three beverages is price inelastic and iv all three beverages are pair wise substitutes we also investigated the hypothesis of identical parameters for all countries by pooling the data across countries and found that the data do not support the hypothesis

tracking costs of time and money how accounting periods affect mental accounting after people incur costs to get future benefits they usually track these costs in their mental accounts and are keen to receive the benefits when they become available we introduce the notion that costs and benefits can occur either in the same accounting period day season etc or in different periods our key argument is that monetary costs are tracked across accounting periods but that temporal costs are written off at the end of the period in which they are incurred thus accounting periods lead to a time money asymmetry in the tracking of costs and consequently in the likelihood of seeking benefits in a laboratory study an online panel study and a field study with movie theater patrons we demonstrate how this relationship among accounting periods cost tracking and benefit seeking is different for time than for money our findings offer insights into the sunk cost effect time money differences and mental accounting

the pricing practices of the liquor control board of ontario reconsidered of course economists are often suspicious of government declarations in this case however we think it justifiable to take them at face value we would agree with breton 1969 who took the higher mark ups levied on foreign wines as prima facie evidence that the lcbo was protecting domestic wines while acheson correctly pointed out that higher mark ups might be consistent with profit maximization and thus could not by themselves logically be taken as evidence of protectionism we wonder why a profit maximization hypothesis would not go any further than price discrimination between foreign and domestic wines surely the profit maximizing mark up on sherries is different from that on champagne or table wines so should profit maximization not imply price discrimination between these groups as well unless the costs of information regarding the elasticities of demand for types of wine are more expensive than the information on elasticity for foreign and domestic wines relative to the increased gross profits from price discrimination along either of these lines one would expect discrimination across types of wine to occur because of these inconsistencies as well as the evidence regarding the other protectionist activities of the lcbo it seems reasonable to us that the particular method of differential mark ups foreign versus domestic and the consistently higher mark ups charged for foreign wines are sufficient pieces of evidence to conclude that the motive behind the lcbo s mark up policy is protectionism not profit maximization

firm characteristics and the cyclicality of r d investments the aim of this study is to combine micro aspects of firm behavior with macro aspects of business development and identify market conditions e g price competition and firm characteristics e g type of r d partners that enable a firm to have a pro cyclical anti cyclical or non systematic r d investment behavior the empirical results confirm to large extent a series of hypotheses as to innovation relevant firm characteristics that underline the three different behavior categories and allow us to make profiles of the three types of r d behavior

modeling the demand for alcoholic beverages and advertising specifications in this paper the demand for beer wine spirits and soft drinks in ontario is modeled in two parts an equation is specified to endogenize group expenditures and a demand system is set up to allocate budgeted group expenditures across types of beverages advertising is allowed to influence both the level of group expenditures and its allocation three popular advertising specifications are compared using the j test and the likelihood dominance criterion even though all three specifications fitted well according to standard criteria the calculated expenditure price and advertising elasticities were sensitive to the manner with which advertising is specified this clearly highlights the need to rely on a sound criterion to identify a dominant specification from the identified dominant specification we found that advertising has very subtle effects on expenditures on alcoholic beverages group and individual beverages thus advertising is not effective in enlarging markets and this suggests that firms especially breweries use advertising to compete in zero sum market share games from a public policy perspective our results are comforting but future research should investigate whether the neutral effect of advertising on aggregated expenditures hide substantial offsetting changes in the drinking habits of individuals 2000 elsevier science b v all rights reserved

short run and long run elasticities for canadian consumption of alcoholic beverages an error correction mechanism cointegration approach elasticities for beer wine and spirits are estimated for each of the provinces of canada over the period 1956 83 using unrestricted dynamic regressions modeled after the error correction mechanism alternative long run estimates are also obtained from cointegrating regressions estimates vary markedly across provinces and suggest that increases in price will reduce consumption of all beverages in the short run but in the long run no evidence is found that spirits use is price sensitive increases in the legal drinking age reduce consumption in the short run but there is little indication of a long run effect the estimated income elasticity of beer is small while the estimated income elasticities for spirits and wine are substantially larger especially in the long run coauthors are ernest h oksanen michael r veall and deborah fretz copyright 1992 by mit press

an applied analysis of brand demand structure the demand literature is concerned with the optimal allocation of expenditure at varied but usually high levels of commodity aggregation much less aggregation however is required for business applications in applied business settings interest centres upon the different brands of the same commodity because policy formulation takes place at the level of the individual brand this paper considers application of formal demand analysis to brand demand data a theoretically plausible demand system is invoked to describe inter brand allocation of expenditure test restrictions imposed by economic theory and yield empirically determined insights into brand demand structure

a reexamination of returns to scale density and technical progress in u s airlines the logic of protecting u s airlines from competition was initially founded on the belief that substantial economies of scale existed in the industry and that consumers would benefit through among other things regulation of fares regulation of service network and restrictions on entry and exit from the industry however studies 1 7 8 12 have undermined the faith in economic regulation by showing that economies of scale were minimal and competition would promote efficiency in a recent study caves christensen and tretheway 5 estimated returns to scale rts and returns to density rtd for u s airlines based on a panel dataset for 1970 1981 containing trunk and local service airlines they estimated rtd and rts from a translog cost function for airline services like many other applied economists working with translog cost functions they found that the neoclassical curvature or regularity conditions on the cost function are not satisified in almost half of the observations 105 out of 208 in general concavity property is satisfied in the neighborhood of the sample mean if it is chosen as the point of approximation for the cost function but not at points further from the mean recently diewert and wales 6 suggested alternative flexible functional forms which are globally concave in input prices if the concavity property is satisfied at only one point thus if the concavity property is violated imposition of it at a single point will make the function globally concave without destroying flexibility use of such functional forms can avoid violation of regularity conditions of the cost function at extreme points the objective of this paper is to estimate a model of airline costs along the lines of caves christensen and tretheway 5 however we extend their results in several ways first we consider a modest generalization of the symmetric generalized mcfadden sgm cost function developed by diewert and wales by including network and control variables in the airline cost function the sgm cost function is flexible and globally concave in input prices thus our estimates of parameters and measures of rts rtd and technical progress are based on a cost function which is globally concave second we estimate the system of input demand functions instead of the cost function and while estimating these input demand functions derived from the cost minimizing behavior of the airlines we incorporate firm and input specific effects these effects capture possible differences in production technologies among airlines third we intro

the demand for alcohol in the uk a comment in a recent article appearing in this journal mcguinness 3 explores the effects of income prices advertising and availability on the consumption of alcohol in the uk his conclusions regarding the effects of advertising on consumption have attracted considerable attention 1 5 from an economic viewpoint his findings regarding the relatively weak and uncertain influence of income on the growth of demand are equally notable the purpose of the present comment is to show that certain unusual features of mcguinness s analysis have important implications for his reported findings mcguinness s regression analysis is based on the first differences of 21 annual observations 1955 75 the general approach used is illustrated by the following representative equation

the link between growth volatility and technical progress cross country evidence abstract this paper provides strong evidence showing that the rate of technical progress plays an important role in stabilizing business cycle volatility empirical tests consistently indicate that business cycle volatility diminishes with increasing rates of technical progress using alternative estimates of technical progress and datasets do not alter the conclusion

the sale of alcohol in denmark recent developments and dependencies on prices taxes how do prices affect the choice of types of alcohol in denmark we study the danish sale of alcoholic beverages in a time series framework first we look at annual data from 1980 investigating the hypothesis of a fairly stable level of sales we conclude stationarity of sales and we also find that the income elasticity of total sales has been zero second we analyse the composition of the alcohol sale between beer wine and spirits in a multivariate model conditional on the development in prices for this analysis we use johansen cointegration techniques again we test that income can be omitted from the model and we use the model to derive the effects on the composition of alcohol sales of three different sets of changes in the alcohol taxation

price fairness good and service differences and the role of vendor costs prior research suggests that consumers are forgiving of a price increase that is commensurate with increased vendor costs we argue that the perceived fairness of the price increase will also depend on the alignability of the cost and price increases such that alignable increases will be perceived as more acceptable than nonalignable increases moreover we predict that when a cost increase is nonalignable consumers will be more receptive to a service price increase than a goods price increase evidence from a series of experiments supports both predictions

how similar are alcohol drinkers international evidence stigler and becker 1977 argue that tastes neither change capriciously nor differ importantly between people it is differences in prices and incomes that determine differences in behaviour in this paper we analyse the alcohol consumption patterns of drinkers from 8 industrialized countries we identify a number of empirical regularities and verify stigler and becker s hypothesis that income and price elasticities of demand are international constants by showing that alcohol consumption patterns in the eight countries exhibit intriguing similarities the income and price elasticities of alcohol are found to be about 0 8 and 0 6 respectively in all eight countries

buying without using biases of german bahncard buyers we use a large data set of german railway travellers to analyse the purchasing decision for fare reducing bahncards we expect that this tariff choice is neither completely rational nor irrational but bounded rational in a meaningful way actually we predict a flat rate bias i e an under use of their bahncards by many customers however we estimate that this bias is not too large the empirical results approve our hypotheses for the most part especially for the more expensive bahncard50 bc50 whereas the under use of the cheaper bahncard25 bc25 is so extensive that it is not worthwhile on average

the demand for alcoholic beverages in spain the objective of this study is to analyze the main determinants of alcoholic beverages consumption at home data comes from the latest spanish household national survey which provides information on expenditure and quantities of different food products by household because households are interviewed only 1 week a large number of zeros have been recorded among the existing censured demand models the double hurdle dh model the purchase infrequency model and the tobit purchase infrequency model among others and after carrying out model selection tests the dh model has been finally estimated all expenditure elasticities are positive corresponding the highest value to spirits own price elasticities are negative and also in this case the spirits exhibit the highest value socio economic variables also play an important role in explaining consumer purchase and consumption decisions

effects of payment mechanism on spending behavior the role of rehearsal and immediacy of payments past expenses have been shown to influence future spending behavior by depleting available budgets however a prerequisite for this relationship is the accurate recall of past payments and the experiencing of the full aversive impact associated with them this article shows that the use of different payment mechanisms influences both these factors and hence moderates the effects of past payments on future spending specifically past payments strongly reduce purchase intention when the payment mechanism requires the consumer to write down the amount paid rehearsal and when the consumer s wealth is depleted immediately rather than with a delay immediacy two experiments show support for the proposed theoretical framework

strategic leaders or strategic groups a longitudinal data envelopment analysis of the u s brewing industry abstract this paper builds on strategic group theory which was originally introduced to help explain the observed variation in firm profitability across an industry this paper applies data envelopment analysis dea to identify both strategic leaders the best practice players in the industry and strategic groups to examine which are the source of the most sustained heterogeneity in the performance of u s brewers contrary to the prevalent research approach in strategy and organization research which places a premium on empirical analyses that maximize explanation of average behavior daft and lewin 1990 this paper examines extremal observations as a means of studying or inducing theories about best practice such as best strategies or most effective organization design lewin and minton 1986 the paper argues that significant insights new knowledge and unexpected theories can arise from studying the best or worst of a population the paper applies dea to a longitudinal reanalysis of u s brewing data to demonstrate its usefulness for obtaining new insights from identifying and studying industry outliers the paper raises important questions about the construct of strategic groups and illustrates how competing theories can be deduced and analyzed for explaining performance heterogeneity in the u s brewing industry

sunk cost fallacy in driving the world s costliest cars we develop a behavioral model of durable good usage with mental accounting for sunk costs it predicts higher than rational usage that attenuates at a rate that increases with sunk costs singapore government policy varied the sunk cost of buying a new car using singapore data we estimate the elasticity of driving with respect to sunk costs to be 0 048 which implies that government policy between 2009 and 2013 was associated with 86 kilometers per month or 5 6 more driving the results are robust to specifying sunk costs as relative to buyer income and estimation with hong kong data we believe this to be the first field evidence of the sunk cost fallacy in usage of a major durable good the online appendix is available at https doi org 10 1287 mnsc 2016 2651 this paper was accepted by john list behavioral economics

when two plus two is not equal to four errors in processing multiple percentage changes when evaluating the net impact of a series of percentage changes we predict that consumers may employ a whole number computational strategy that yields a systematic error in their calculation we report on three studies conducted to examine this issue in the first study we identify the computational error and demonstrate its consequences in a second study we identify several theoretically driven boundary conditions for the observed phenomenon finally we demonstrate in a real world retail setting that consistent with our premise sequential percentage discounts generate more purchasers sales revenue and profit than the economically equivalent single percentage discount

payment depreciation the behavioral effects of temporally separating payments from consumption research suggests that individuals mentally track the costs and benefits of a consumer transaction for the purpose of reconciling those costs and benefits on completion of the transaction prelec and loewenstein 1998 thaler 1980 1985 in transactions where costs precede benefits this can lead to a systematic and economically irrational attention to sunk costs arkes and blumer 1985 thaler 1980 in this article we consider economic exchanges in which costs significantly precede benefits as with many prepayment types of consumer transactions we predict a consumer will gradually adapt to a historic cost with the passage of time thereby decreasing its sunk cost impact on the consumption of a pending benefit we label this process of gradual adaptation to costs payment depreciation in a series of experiments we find evidence of payment depreciation across a range of consumer transactions and offer insight into the behavioral implications of temporally separating costs from benefits

australian beer wars and pub demand how vertical restraints improved the drinking experience recently australia s two largest brewers carlton and united breweries and lion nathan have been aggressively competing for market share in the state of victoria among other strategies the two breweries have implemented vertical restraints in the form of extensive agreements with retailers and the outright purchase of pubs a key outcome of these purchases and agreements is the renovation of many pubs as brewers attempt to attract increasingly sophisticated drinkers this paper attempts to quantify the value of these renovations and measure their associated impact on consumers relying on insights from the hedonic literature a simple but novel approach is used to estimate the implicit price of the pub environment and the effects of renovations on that price

the sources of asian pacific economic growth the objective of this study is to analyze the sources of economic growth of ten asian pacific countries apcs china hong kong indonesia japan malaysia the philippines singapore south korea taiwan and thailand in conjunction with four industrialized western countries iwcs france west germany united kingdom and the united states in the postwar period in previous studies boskin and lau 1990 and kim and lau 1994c find for the group of five g 5 and the east asian newly industrialized countries nics respectively that 1 all countries share the same aggregate metaproduction function in terms of efficiency equivalent units and 2 technical progress can be represented in all countries as purely capitalaugmenting however kim and lau 1994c also find that there has been no measured technical progress in the east asian nics despite their much higher rates of economic growth the questions of interest in this study are 1 does the same aggregate meta production function that applies to the g5 countries and the east asian nics also apply to other apcs 2 does the finding of absence of technical progress hold for all the other apcs except japan and 3 what is the relative importance of the different sources of economic growth for the apcs

a model of mental accounting and reference price adaptation consumers possess a mental account that stores the worth of items purchased and yet to be consumed reference prices act as the book values of these items movements in the account the comparison between the reference price and the price paid at entry and the comparison between the benefit of consumption and the reference price at exit yield hedonic benefits the reference price is determined by a psychological process of adaptation to the price evoked by the trade the model is integrative in that it explains a wide array of observed anomalies such as sunk cost effects payment depreciation reluctance to trade preference for prepayment and the flat rate bias the model also generates new testable implications this paper was accepted by james smith decision analysis

when choosing makes a good thing better temporal variations in the valuation of hedonic consumption abstract this research investigates how the valuation of delayed consumption of hedonic products such as concerts and chocolate varies with the passage of time between choice and consumption the authors find that when consumers make their own choices they exhibit increases in evaluations of delayed consumption but only if the interval between choice and consumption is relatively short the effect attenuates over longer periods resulting in an inverted u shaped relationship between evaluations and time in contrast when somebody else chooses the same option for the consumer evaluations decrease with the passage of time these effects depend on the extent of intrinsic motivation toward the object of consumption and occur only for consummatory consumption that is of inherent interest moreover anticipatory increases in evaluations before consumption have ironic negative effects on postconsumption evaluations the authors discuss implications and directions for further research

the rotterdam demand model and its application in marketing this paper shows how the system wide approach to demand analysis can be utilized in marketing in the context of the rotterdam model we describe how the approach can be applied to narrowly defined groups of goods such as beer wine and spirits to estimate income and price elasticities of demand the paper also provides extensions to deal with advertising and introduces a new way of identifying market structure