buyer initiated vs seller initiated information revelation sales presentations are the core of the selling process where salespeople provide information to prospects one challenge is that the amount of information available to be potentially communicated may exceed salespeople s ability to communicate or customers ability to process there is limited bandwidth between the firm and customers one important decision then is which information should customers see what the firm chooses to tell customers may be informative in itself when constrained to a seller initiated information revelation format where the firm chooses which feature to show the firm never finds it optimal to offer more features than it is able to inform customers about consequently customers never find credible a claim that the product has all features the important implication is that price alone cannot serve as a signal of quality in this setting in contrast a buyer initiated information revelation format where customers decide which information to receive increases the probability of a sale and also results in the production of higher quality products in a competitive setting by adopting buyer initiated information revelation firms are able to attain positive profits this is due to the fact that customers infer the product s quality from the price along with the information revelation format customers know that at some prices firms find it profitable to produce high quality products and at other lower prices this is not the case thus customer empowerment leads to higher profits

the hidden information content of price movements dynamic patterns of prices in different markets may motivate strategic consumers who could be monitoring price movements over time to game vendors do past price movements carry information about the probability and magnitude of future price drops conducting empirical work in the airline industry on near 1000 us domestic routes we find that some price metrics carry information about future price swings these variables can assist in predicting the likelihood and magnitude of price drops these price metrics yield significantly different signals which also vary as the prediction horizon changes

storable good monopoly the role of commitment we study dynamic monopoly pricing of storable goods in an environment where demand changes over time the literature on durables has focused on incentives to delay purchases our analysis focuses on a different intertemporal demand incentive for consumers the key force on the consumer side is advance purchases or stockpiling this stockpiling motive can be present in the case of standard durables as well in environments unmodeled in the prior literature we show that if the monopolist cannot commit then prices are higher in all periods and social welfare is lower than in the case in which the monopolist can commit this is in contrast with the durable goods analysis in the literature on the coase conjecture

the wage gap between francophones and anglophones a canadian perspective 1970 2000 the wage gap between francophone and anglophone men from 1970 and 2000 fell by 25 percentage points within quebec but only by 10 points canada wide largely because the wages of quebec anglophones fell by 15 points relative to other canadian anglophones accordingly the canadian measure of the francophone gap better reflects the changing welfare of francophones than the quebec measure over half of the reduction in the canadian francophone wage gap is explained by rising francophone education levels in quebec the declining number and relative wages of anglophone workers is best explained by a falling demand for english speaking labour l ecart de salaires entre les hommes francophones et anglophones est tombe de 25 points de pourcentage au quebec entre 1970 et 2000 mais seulement de 10 points a l echelle canadienne largement parce que les salaires des anglophones au quebec sont tombes de 15 points par rapport aux autres canadiens anglophones en consequence la mesure canadienne de l ecart prend mieux la mesure du changement de bien etre des francophones que la mesure quebecoise plus de la moitie de la reduction dans l ecart au niveau canadien s explique par l accroissement des niveaux d education des francophones au quebec le nombre en declin des travailleurs anglophones et la chute de leurs salaires relatifs s expliquent par un declin dans la demande de travailleurs parlant anglais

the principle of minimum differentiation holds under sufficient heterogeneity the so called principle of minimum differentiation stated by hotelling has been challenged by many authors this paper restores the principle by showing that n firms locate at the center of the market and charge prices higher than the marginal cost of production when heterogeneity in consumers tastes is large enough

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

the information in the high yield bond spread for the business cycle evidence and some implications the market for high yield below investment grade corporate bonds developed in the middle 1980s we show that since this time the high yield spread has had significant explanatory power for the business cycle we interpret this finding as possibly symptomatic of financial factors at work in the business cycle along the lines suggested by the financial accelerator we also show that over this period the high yield spread outperforms other leading financial indicators including the term spread the paper bill spread and the federal funds rate we conjecture that changes in the conduct of monetary policy over time may account for the reduced informativeness of these alternative indicators all of which are tied closely to monetary policy copyright 1999 by oxford university press

research note additional learning and implications on the role of informative advertising observers argue that evidence for the persuasive role of advertising comes from competitive categories where increases in advertising lead to higher average prices conversely others claim that advertising serves a purely informational role here higher levels of advertising lead to better informed consumers and this should increase competition and stimulate lower prices the objective of this study is to neither confirm nor refute either of these perspectives it is rather to show that increases in informative advertisingalone can lead to both higher or lower prices i further show that the direction of this relationship depends on the level of differentiation between competing firms similar to grossman and shapiro 1984 i examine conditions where the differences between competing products are small but i also examine conditions where the differences are significant the role of advertising is to inform consumers about individual products and higher advertising for a product means that more of the potential market knows about it higher levels of advertising increase the relative importance of fully informed consumers compared to partially informed consumers this dynamic is the basis for explaining why informative advertising can push prices either up or down in a uniformly distributed spatial market

price dispersion in the small and in the large evidence from an internet price comparison site this paper examines four million daily price observations for more than 1 000 consumer electronics products on the price comparison site http shopper com we find little support for the notion that prices on the internet are converging to the law of one price in addition observed levels of price dispersion vary systematically with the number of firms listing prices the difference between the two lowest prices the gap averages 23 per cent when two firms list prices and falls to 3 5 per cent in markets where 17 firms list prices these empirical results are an implication of a general clearinghouse model of equilibrium price dispersion

social responsibility and product innovation this paper examines the incentives of firms to invest in socially responsible product innovations our analysis connects the existence of socially responsible innovations to the presence of intrinsic and extrinsic social responsibility preferences in addition to deriving economic value from the product consumers have heterogeneous intrinsic needs to consume products that are socially responsible they also have extrinsic social comparison preferences that are based on their meetings with others in social interactions the frequency of these meetings are endogenous to the consumption choices of consumers a consumer enjoys a social comparison benefit if her consumption decision is more socially responsible than the consumer that she meets in a social interaction and a social comparison cost if it is less socially responsible the analysis reveals a nonmonotonic effect of social comparison effects on innovation incentives when the economic value of a product is relatively small the incentive to innovate

embedded premium promotion why it works and how to make it more effective in this paper we define an embedded premium ep as an enhancement that involves a social cause added on to a product or service we characterize ep as a sales promotion strategy and juxtapose it with traditional approaches such as discounts and rebates across three experiments using a nationwide internet panel and employing stated measures and model based inference we find that at low denominations ep is more effective than an equivalent price discount we describe how an ep s social association may influence consumer choice quite differently than price promotions and contrary to the asymmetric price promotion effect documented in the promotions literature we find that ep benefits an unknown brand more than a known brand our hierarchical bayes approach uncovers heterogeneity in ep effectiveness that can be explained by affinity toward the focal charity personal motivations and demographic markers an identifiable segment of individuals prefer the other over self suggesting possible ep optimization and segmentation strategies two such strategies customization and coverage are empirically tested and the former is shown to be very effective our findings have broad implications for brand managers with regard to resource allocation and ep program return on investment roi as well as important social welfare implications

language and urban labor market segmentation theory and evidence abstract i propose a language theory of labor market segmentation people of different language origins form separate urban labor submarkets and can switch between submarkets two types of wage differentials emerge namely the within labor market wage gap and the within language group wage gap the average wage in each market and a worker s choice of the labor market depend on the population sizes of the relevant groups these implications are tested using the 2001 census of canada public use microdata a unique feature of these data is the reported work language which helps me to identify labor market segments the empirical evidence supports my theory

intertemporal pricing and consumer stockpiling we study a dynamic pricing problem for a class of products with stable consumption patterns e g household items staple foods consumers may stock up the product at current prices for future consumption but they incur inventory holding costs we model this situation as a dynamic game over an infinite time horizon in each period the seller sets a price and each consumer chooses how many units to buy we develop a solution methodology based on rational expectations by endowing each player with beliefs we decouple the dynamic game into individual dynamic programs for each player we solve for the rational expectations equilibrium where all players make optimal dynamic decisions given correct beliefs about others behavior in equilibrium the seller may either charge a constant fixed price or offer periodic price promotions at predictable time intervals we show that promotions are useful when frequent shoppers are willing to pay more for the product than are occasional shoppers we also develop several model extensions to study the impact of consumer stockpiling on the seller s inventory production and rationing strategies

price promotions limiting competitive encroachment in this paper we explore equilibrium pricing strategies in an infinite horizon repeated game for an oligopoly we model the interactions between three firms in a market of switchers and loyals our analysis shows that if there are sufficiently large number of switchers in the market the demand parameter is within an acceptable range and the firms have a sufficiently low discount rate alternating promotions between national firms can be an outcome of a perfect nash equilibrium between competing firms this equilibrium results in an implicit collusion between national firms and therefore suggests that price promotions can be interpreted as a long run strategy pursued by national firms to defend their market shares from possible encroachments of a third firm in this way we attempt to provide an explanation for the patterns of promotion observed in some industries and in particular the beverage industry

equilibria and efficiency in bilingual labour markets abstract we consider a labour market where two languages are commonly in use and each individual may make a costly investment to learn the language which is not his or her mother tongue language skills are productive in a human capital sense and can also be used to signal unobservable traits to employers due to the informational asymmetry between workers and employees the equilibrium rate of bilingualism in the economy may exceed the socially efficient level on the other hand the spillovers associated with second language acquisition may imply there is not enough bilingualism relative to the social optimum we consider the circumstances under which either the signalling or the network welfare effects dominate in equilibrium depending on the parameter values of the model policies of either encouraging or discouraging the investment in language skills may be welfare enhancing

hotelling s spatial competition as a model of sales abstract hotelling s spatial competition model is used to explain the existence of sales it is shown that 1 an equilibrium in randomized strategies exists when a pure strategy equilibrium fails to exist 2 with more dissimilarity among brands prices are chosen from a wider interval

a price discrimination theory of coupons the objective of this paper is to analyze the consumer s decision in electing to use cents off coupons distributed by manufacturers of consumer products arguing that the decision to use coupons is based on the tradeoff between costs of using coupons and the savings obtained it is shown that coupons can serve as a price discrimination device to provide a lower price to a particular segment of consumers based on a price theoretic model it is shown that the users of coupons are more price elastic than nonusers of coupons and that the opportunity cost of time and other household resource variables are determinant factors in consumers decisions implications derived from the model are tested using diary panel data

price match announcements in a consumer search duopoly using a model of sequential search we show that announcements to price match raise prices by altering consumer search behavior first price matching diminishes firms incentives to lower prices to attract consumers who have no search costs second for consumers with positive search costs price matching lowers the marginal benefit of search inducing them to accept higher prices finally price matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium price increases grow in the proportion of consumers who invoke price matching guarantees and in the level of equilibrium asymmetry

an empirical study of credit shock transmission in a small open economy in this paper we identify and estimate the dynamic effects of foreign us and national canadian credit shocks in a small open economy we use standard credit spreads as proxies to the external finance premium our first result suggests that the us and canadian credit spreads contain substantial forecasting power for several measures of the canadian real economic activity especially during the recent financial crisis and its aftermath secondly an adverse us credit shock generates a significant and persistent economic slowdown in canada the national external finance premium rises immediately while interest rates credit aggregates output and employment indicators decline variance decomposition reveals that credit shocks have a sizeable effect on real activity measures leading indicators and credit spreads yet the unexpected shocks in domestic credit spreads are not able to generate any significant dynamic response of the real activity once we control for the us credit market conditions

the rational effect of price promotions on sales and consumption we explore the rational effect of price variation on sales and consumption in markets where consumers are uncertain about the future price of goods we first derive an optimal ordering policy which expresses the amount a consumer should purchase and consume in a given period as a function of the observed price of the good the distribution of future prices and the nature of his or her inventory this policy extends previous normative models of inventory control such as those by golabi 1985 and kalymon 1970 to the case where the amount to consume in a given period is an explicit decision variable and prices follow a first order stochastic process we then use this model to explore how changes in the long run frequency and temporal correlations of price promotions should normatively affect the contemporaneous relationship between purchase consumption and price among the predictions which follow from the model are that consumption should rationally increase with the size of existing inventories the short term sensitivity of sales to prices should be greater than that of consumption to price and this discrepancy increases with decreases in the temporal correlation of price deals and the long term relative frequency of price deals

mixed strategy trade equilibria textabstractconsiders the hybrid situation where some customers care only about the price while others have a brand preference or care about product characteristics

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

why competition may drive up prices abstract we show that the expected price of an incumbent firm may increase in response to increasing competition as it may become more profitable to exploit a rather immobile fraction of consumers instead of capturing a larger but more contested segment of the market to derive this result we consider two approaches of modelling the degree of competition first in a duopolistic setting competition is said to be more intense if the entrant s product becomes more attractive to the mobile fraction of buyers in this case we find that all buyers i e both the mobile and the immobile fraction may lose if the market becomes more competitive secondly in a model with two entrants competition is said to become intense if entrants serve an overlapping segment of the market for mobile buyers

it takes two to tango equilibria in a model of sales we show that the varian model of sales with more than two firms has two types of equilibria a unique symmetric equilibrium and a continuum of asymmetric equilibria in contrast the 2 firm game has a unique equilibrium that is symmetric for the n firm case the asymmetric equilibria imply mixed strategies that can be ranked by first order stochastic dominance this enables one to rule out asymmetric equilibria on economic grounds by constructing a metagame in which both firms and consumers are players the unique subgame perfect equilibrium of this metagame is symmetric

cause marketing spillover effects of cause related products in a product portfolio the number of firms carrying a cause related product has significantly increased in recent years we consider a duopoly model of competition between firms in two products to determine which products a firm will link to a cause we first test the behavioral underpinnings of our model in two laboratory experiments to demonstrate the existence of both a direct utility benefit to consumers from cause marketing cm and a spillover benefit onto other products in the portfolio linking one product in a product portfolio to a cause can therefore increase sales both of that product and via a spillover effect of other products in the firm s portfolio we construct a cm game in which each firm chooses which products if any to place on cm in the absence of a spillover benefit a firm places a product on cm if and only if it can increase its price by enough to compensate for the cost of cm thus in equilibrium firms either have both products or neither product on cm however with the introduction of a spillover benefit to the second product this result changes we show that if a single firm in the market links only one product to a cause it can raise prices on both products and earn a higher profit we assume each firm has an advantage in one product and show that there is an equilibrium in which each firm links only its disadvantaged product to a cause if the spillover effect is strong there is a second equilibrium in which each firm links only its advantaged product to a cause in each case firms raise their prices on both products and earn higher profits than when neither firm engages in cm we also show that a firm will never place its entire portfolio on cm overall our work implies that by carrying cause related products companies can not only improve their image in the public eye but also increase profits

the bright side of loss aversion in dynamic and competitive markets a well established phenomenon of consumer buying behavior is that consumers evaluate prices relative to a reference point and exhibit loss aversion i e their propensity to buy is more negatively affected by prices above the reference point than it is positively affected by prices below the reference point the objective of this paper is to analytically examine how the competitive strategy and profitability of firms are affected by the presence of consumer loss aversion in the price dimension although we assume that consumer loss aversion increases consumer propensity to search for lower prices we find that it does not necessarily lead to lower prices or profits when firms compete over multiple periods and when the consumer reference price in subsequent periods is affected by current prices specifically consumer loss aversion could lead to higher prices and profits when consumer valuation is sufficiently high relative to search costs and the proportion of consumers with positive search costs is in an intermediate range we also show that when forward looking firms incorporate the negative effect of price promotions on future profits the equilibrium range of price promotions may actually increase

the role of bank capital in the propagation of shocks abstract the recent financial turmoil has underlined the importance of analyzing the link between banks balance sheets and economic activity we develop a dynamic stochastic general equilibrium model in which bank capital mitigates an agency problem between banks and their creditors as a result the capital position of banks affects their ability to attract loanable funds and therefore influences the business cycle through a bank capital channel of transmission we find that the bank capital channel greatly amplifies and propagates the effects of technology shocks on output investment and inflation moreover bank capital shocks create sizeable declines in output and investment

shocks structures or monetary policies the euro area and us after 2001 abstract the us federal reserve cut interest rates more vigorously in the recent recession than the european central bank did by comparison with the fed the ecb followed a more measured course of action we use an estimated dynamic general equilibrium model with financial frictions to show that comparisons based on such simple metrics as the variance of policy rates are misleading we find that because there is greater inertia in the ecb s policy rule the ecb s policy actions actually had a greater stabilizing effect than did those of the fed as a consequence a potentially severe recession turned out to be only a slowdown and inflation never departed from levels consistent with the ecb s quantitative definition of price stability other factors that account for the different economic outcomes in the euro area and us include differences in shocks and differences in the degree of wage and price flexibility

personalized pricing and advertising an asymmetric equilibrium analysis we study personalized price competition with costly advertising among n quality cost differentiated firms strategies involve mixing over both prices and whether to advertise in equilibrium only the top two firms advertise earning bertrand like profits welfare losses initially rise then fall with the ad cost with losses due to excessive advertising and sales by the wrong firm when firms are symmetric the symmetric equilibrium yields perverse comparative statics and is unstable our key results apply when demand is elastic when ad costs are heterogeneous and with noise in consumer tastes

the existence of low end firms may help high end firms two models of competition between high end and low end products benefiting the high end firms are presented one is a quantity competition model and the other is a price competition model with product differentiation the key factor is the existence of two heterogeneous consumer groups those who demand only high end name brand products and those who care little whether products are high or low end we show that under certain conditions the profits of firms in the high end market are larger when there are firms producing low end products than when there are not the existence of price sensitive consumers who care little about product quality intensifies competition among the high end firms the existence of low end firms functions as a credible threat which induces the high end firms not to overproduce because price sensitive consumers buy products from the low end firms the result provides a new theoretical mechanism concerning the profitability and pricing of national brand firms after the entry of private labels it has an implication for pricing and marketing strategies established firms should not decrease their prices after the entry of nonestablished firms

can a decline in search cost increase prices this paper provides a new explanation of why a decline in consumers price search cost may not lead to lower prices in a duopoly with price competition i show that when some consumers are captive to one firm there may be a non monotonic relationship between search cost and market power firms may charge high prices with higher probability and the average price charged may be higher when consumers price search cost falls below a critical level furthermore when firms have asymmetric captive segments expected prices charged by each firm may move in opposite directions as search cost declines resume est ce qu un declin dans le cout de la recherche accroit les prix ce texte propose une nouvelle explication des raisons pour lesquelles un declin dans le cout de la recherche des consommateurs pour le meilleur prix peut ne pas entrainer un declin du niveau des prix dans un duopole avec competition par les prix on montre que quand certains consommateurs sont prisonniers d une firme il peut y avoir une relation non monotone entre cout de la recherche et pouvoir dans ce marche les firmes peuvent imposer des prix plus eleves avec une plus grande probabilite et le prix moyen charge peut etre plus eleve quand le cout de recherche du meilleur prix des consommateurs tombe au dessous d un seuil critique de plus quand les firmes ont des segments captifs asymetriques le prix charge anticipe pour chaque firme peut se deplacer dans des directions opposees a proportion que les couts de recherche declinent

varma versus var for macroeconomic forecasting in this article we argue that there is no compelling reason for restricting the class of multivariate models considered for macroeconomic forecasting to vector autoregressive var models given the recent advances in vector autoregressive moving average varma modeling methodology and improvements in computing power to support this claim we use real macroeconomic data and show that varma models forecast macroeconomic variables more accurately than vars

competitive promotional strategies this article analyzes the equilibrium pricing strategies of brands engaged in a pricing game each brand has a monopoly market loyal consumers and competes with others in a common market called brand switchers in the case of a duopoly it is shown that the behavior of the brand switchers characterizes the equilibrium behavior of the duopolists this article focuses on two key comparative statics namely the depth of discounts away from a regular high price and the probability of giving a deal or the frequency of deals how these properties vary with the size of the loyal markets and the behavior of the brand switching population is discussed copyright 1988 by the university of chicago

the existence of equilibrium in discontinuous economic games i theory the article presents information about the existence of equilibrium in discontinuous economic games in this paper and its sequel presents study the existence of nash equilibrium in games where agents payoff functions are discontinuous the enquiry is motivated by a number of recent studies that have uncovered serious existence problems in seemingly innocuous economic games in the sequel to this paper authors have explained the utility function in the economic games referred to earlier are neither continuous nor quasi concave however they demonstrate that the payoff functions in mildly modified versions of these constructs exhibit two weaker forms of continuity which together with the requirement of quasi concavity suffice for the existence of an equilibrium from this one may conclude that at least in the modified versions of these models discontinuities in the payoff functions are not the real source of the problem rather it is the failure of the payoff functions to the quasi concave which is responsible for the non existence of equilibrium these observations bear on the existence of nash equilibrium in pure strategies

modeling the psychology of consumer and firm behavior with behavioral economics abstract marketing is an applied science that tries to explain and influence how firms and consumers behave in markets marketing models are usually applications of standard economic theories which rely on strong assumptions of rationality of consumers and firms behavioral economics explores the implications of the limits of rationality with the goal of making economic theories more plausible by explaining and predicting behavior more accurately while maintaining formal power this article reviews six behavioral economics models that are useful to marketing three models generalize standard preference structures to allow for sensitivity to reference points and loss aversion social preferences toward outcomes of others and preference for instant gratification the other three models generalize the concept of game theoretic equilibrium allowing decision makers to make mistakes encounter limits on the depth of strategic thinking and equilibrate by learning from feedback the authors also discuss a sp

online shopping and platform design with ex ante registration requirements we study platform design in online markets in which buying involves a nonmonetary cost for consumers caused by privacy and security concerns firms decide whether to require registration at their website before consumers learn relevant product information we derive conditions under which a monopoly seller benefits from ex ante registration requirements and demonstrate that the profitability of registration requirements is increased when taking into account the prospect of future purchases or an informational value of consumer registration to the firm moreover we consider the effectiveness of discounts store credit as a means to influence the consumers registration decision finally we confirm the profitability of ex ante registration requirements in the presence of price competition the online appendix is available at https doi org 10 1287 mnsc 2016 2595 this paper was accepted by j miguel villas boas marketing

earnings by language group in quebec in 1980 and emigration from quebec between 1976 and 1981 between 1976 and 1981 many pople moved out of quebec especially anglophones to the extent that a persons decision to stay or to move may be related to earnings prospects earnings comparisons with individuals who lived in quebec in 1981 may suffer from a selection bias this paper analyses emigration from quebec and earnings with a two equation model using a sample of men drawn from the from the 1981 canadian census it is found that a selection bias is indeed present for anglophones and that the returns to learning french may be underestimated when that bias is ignored excerpt

search costs and equilibrium price dispersion in auction markets abstract a leading explanation for price dispersion in posted price markets is search costs we incorporate this insight into a model of competing second price auctions similar to ebay by doing so we extend the narrow literature on competing auctions to capture price dispersion and grow the already large literature on price dispersion to include auctions we provide evidence on search costs and price dispersion using data collected from ebay identifying search costs by exploiting a discontinuity in the visibility of auctions due to ebay s search tool

consumer privacy and marketing avoidance a static model we introduce the concept of marketing avoidance consumer efforts to conceal themselves and to deflect marketing the setting is one in which sellers market some item through solicitations to potential consumers who differ in their benefit from the item and suffer harm from receiving solicitations concealment by one consumer induces sellers to shift solicitations to other consumers whereas deflection does not solicitations cause two externalities direct harm on consumers and the indirect cost of consumer concealment and deflection we find that in markets where the marginal cost of solicitation is sufficiently low efforts by low benefit consumers to conceal themselves will increase the cost effectiveness of solicitations and lead sellers to market more however concealment by high benefit consumers leads sellers to market less furthermore concealment by low benefit consumers increases direct privacy harm and consumer welfare is higher with deflection than concealment finally it is optimal to impose a charge on solicitations

the timing of sales this paper presents a model of intertemporal price discrimination a fixed number of sellers produce a homogeneous good consumers with different preferences enter the market in each period and leave when they make a purchase the sellers typically vary their prices over time charging a high price in most periods but occasionally cutting the price to sell to a large group of customers with a low reservation price in some equilibria all stores lower their price at the same time and to the same level

factor augmented varma models with macroeconomic applications we study the relationship between vector autoregressive moving average varma and factor representations of a vector stochastic process we observe that in general vector time series and factors cannot both follow finite order var models instead a var factor dynamics induces a varma process while a var process entails varma factors we propose to combine factor and varma modeling by using factor augmented varma favarma models this approach is applied to forecasting key macroeconomic aggregates using large u s and canadian monthly panels the results show that favarma models yield substantial improvements over standard factor models including precise representations of the effect and transmission of monetary policy

capacity sharing between competitors market competition may lead to mismatch between supply and demand that is overpricing may give rise to underselling and underpricing may yield stockout capacity sharing is a common practice to

consumer stockpiling and competitive promotional strategies an examination of brand prices in several categories reveals that the distribution of prices is multimodal with firms offering shallow and deep discounts another interesting feature of these distributions is that they may have holes in the interior of the support these pricing distributions do not occur in extant theoretical models of price promotions we develop a dynamic model of competition in which some price sensitive consumers stockpile during periods of deep discounts a game theoretic analysis of our model generates a multimodal pricing distribution with a hole in the interior of the support consumer stockpiling in our model also gives rise to negative serial correlation in prices this is consistent with our empirical observation of the pricing distribution of several brands across multiple categories in the iri marketing data set we generate several interesting insights into firms optimal promotional strategies and their interplay with the clientele mix market structure and other market factors we find that in equilibrium stockpiling by price sensitive consumers neither harms nor benefits firms when they adopt equilibrium strategies interestingly when price sensitive consumers stockpile even increased consumption as a result of stockpiling does not lead to higher profits for firms

tax evasion tax competition and gains from nondiscrimination with equilibrium mixed strategies abstract this note extends janeba and peters econ j 109 1999 93 paper on tax evasion and tax competition by allowing for equilibrium mixed strategies it shows that discrimination is still the weakly dominant strategy for both countries

do financial variables help forecasting inflation and real activity in the euro area abstract this paper uses a large data set consisting of 447 monthly macroeconomic time series concerning the main countries of the euro area to simulate out of sample predictions of the euro area industrial production and the harmonized inflation index and to evaluate the role of financial variables in forecasting we considered two models which allow forecasting based on large panels of time series forni et al rev econom statist 82 2000 540 mimeo 2001b and stock and watson mimeo 1999 performance of both models were compared to that of a simple univariate ar model results show that multivariate methods outperform univariate methods for forecasting inflation at one three six and twelve months and industrial production at one and three months we find that financial variables do help forecasting inflation but do not help forecasting industrial production

theoretical models of sales promotions contributions limitations and a future research agenda our objective in this paper is to review theoretical models of sales promotions we highlight the key contributions of these models discuss their limitations and outline an agenda for future research managerial questions examined in these models include some very fundamental issues such as why firms resort to the use of sales promotions in mature markets and why the use of sales promotions has increased dramatically during the last two decades also included in this review are models that address firm level strategic issues such as the allocation of dollars between advertising and sales promotions and the relative emphasis on trade promotions vis a vis consumer promotions we also review theoretical models that explain how consumers respond to price promotions and what type of sales promotion tools may be superior to others in a particular market the review concludes with a possible agenda for future research

dealing temporary price cuts by seller as a buyer discrimination mechanism this paper is concerned with temporary price cuts deals sales and specials as a mechanism for the seller to price discriminate between buyers with different intensities of demand we analyze why a seller offers such price cuts which buyers take advantage of them and what the parameters are that determine the amount and frequency of the discount offered in the remainder of this section we briefly review the literature on price deals 1 in section ii simple models of buyer and seller behavior are developed and we show why and how a seller adopts a dealing strategy section iii summarizes the key implications of the model and indicates how the price discrimination hypothesis could be tested in practice section iv suggests possible extensions of the model finally section v gives our conclusions in the marketing literature the issue of who is deal prone has been extensively researched an explanation for temporary price cuts usually called deals sales or specials is provided we hypothesize that they are a mechanism that discriminates between more intense and less intense demanders we further hypothesize a positive relationship between demand elasticity and holding costs buyers with more intense demand with high holding costs are those who will be buying the product at its regular price the low holdingcost buyers take advantage of deals by forward buying the model is applicable to three relationships 1 manufacturer reseller where the reseller may be a wholesaler or a retailer 2 resellerreseller for example wholesaler retailer and 3 retailer consumer we are grateful to michael mussa and albert madansky for their comments we also benefited from comments made by the marketing faculty of the wharton school at a seminar where an earlier version of this paper was presented neil beckwith in particular is acknowledged 1 for a more detailed review of deals and similar pricecutting mechanisms e g mail in rebates cents off labels coupons etc see narsimhan 1982 chan 2 journal of business 1985 vol 58 no 3 1985 by the university of chicago all rights reserved 0021 9398185 5803 0004 01 50

individual firm and market dynamics of csr activities this paper investigates how firms should plan corporate social responsibility short csr this dynamic analysis starts with a firm s intertemporal optimization problem and proceeds to analyze interactions with other firms which are crucial if csr is profitable for firm a then it is most likely also profitable for competitors b and c and these simultaneous decisions affect the gain each would achieve from trying to advance its own position we find that multiple equilibria exist irrespective of whether interactions with other firms are taken into account interactions can eliminate or create additional steady states and can lead to a situation in which history is insufficient to determine the long run outcome among multiple steady states so that coordination is beneficial

dynamic targeted pricing with strategic consumers abstract we investigate in this paper whether dynamic targeted pricing based on consumer purchase history could benefit a practicing firm even when consumers are strategic in that they actively seek to avail themselves of a low price in the future such strategic behavior on the part of consumers has been shown in the literature to render such dynamic targeted pricing unprofitable even for a monopoly firm we show that dynamic targeted pricing can benefit competing firms when they actively pursue customer recognition based on consumer purchase history this is because in order to pursue customer recognition competing firms need to price high to screen out price sensitive consumers and hence price competition is moderated as a result all competing firms can become better off with targeted pricing than without even when consumers behave strategically interestingly because of this competition moderation effect the paradoxical outcome occurs where dynamic targeted pricing may not benefit a monopolist but it may benefit competing firms we also show that dynamic targeted pricing can expand the market such that social welfare unambiguously improves

promotion effect on endogenous consumption over the years researchers have found that promotion makes consumers switch brands and purchase earlier or more however it is unclear how promotion affects consumption especially for product categories that are perceived to be versatile and substitutable in this paper we propose a dynamic structural model with endogenous consumption under promotion uncertainty to analyze the promotion effect on consumption this model recognizes consumers as rational decision makers who form promotion expectations and plan their purchase and consumption decisions in light of promotion schedule applying the proposed model to packaged tuna and yogurt we find that endogenous consumption responds to promotion as a result of forward looking and stockpiling behavior this is the first empirical paper that recognizes consumption as an endogenous decision variable and proposes a structural model to offer behavioral explanations on whether how and why promotion encourages consumption for product categories with flexible consumption