the effect of slack diversification and time to recall on stock market reaction to toy recalls abstract past toy recalls have led to an increase in consumer concerns while toy manufacturers and retailers increasingly outsource and create longer supply chains making it more challenging for them to ensure toy safety this article examines firms making toy recall announcements to assess the impact operational characteristics have on the negative stock market reaction to the announcement 135 toy recall announcements in the u s from 1979 to 2016 were analyzed using event study and cross sectional regression while a toy recall announcement results in a negative stock market reaction our results show that greater levels of business diversification inventory slack and a longer time to recall are all associated with a less negative stock market reaction in contrast greater capacity slack is associated with a more negative stock market reaction we find no evidence that geographic diversification or financial slack influences the stock market reaction nor have reactions changed appreciably over time this article contributes to the product harm and product recall literature by focusing on these operational elements managers should be aware of the benefits of greater slack and business diversification while planning their business and the impact of a longer time to recall

currency and credit in a private information economy in an environment with private information spatial separation and limited communication a currency like object and more standard named credits can be distinguished the credit objects can be used among agents in an enduring relationship that is among agents with known trading histories whereas the currency like object must be used among relative strangers in this environment collectively determined pareto optimal rules make the level of the currency like object and the mix of currency to named credits responsive to individual needs and to economywide states total indebtedness is determined by the number of lenders that is by preference or demand shocks and the mix of currency to credits is determined by transaction patterns among the agents

measuring image spillovers in umbrella branded products umbrella branding the practice of labeling more than one product with a single brand name is commonly used by multiproduct companies spillovers occur when information about one product affects the demand for other products with the same brand name this article provides a methodology to analyze spillovers and uses it to measure two instances of spillover effects the study shows that negative spillovers resulted from the audi 5000 s problems with sudden acceleration and that positive spillovers resulted from jaguar s first major model change in seventeen years copyright 1990 by the university of chicago

on the use of econometric models for policy simulation in marketing abstract in this article the author discusses the properties of useful econometric models for marketing phenomena with particular attention on models for policy simulations the author addresses model diagnostics parameter stability exogeneity and the lucas critique he also presents the results of a search through the 1998 2003 issues of the journal of marketing research finally the author offers practical guidelines

exclusion and moral hazard the case of identical demand abstract this paper examines the problem of costly exclusion of individuals from a public good previous analyses of exclusion have treated it as solely a question of technologies in our analysis exclusion depends on technology and incentives in this paper providers of the good design a mechanism to provide an optimal level of deterrence to free riders if individuals are heterogeneous optimal deterrence may allow some free riders we examine the effect of costs of exclusion on the samuelson condition for optimal provision and see that the desire to deter free riding leads to underprovision of the good irrespective of the degree of rivalry of the good

asymmetric promotion effects and brand positioning several studies have shown that promotions of national brands yield more effect than those of store brands e g allenby and rossi 1991 blattberg and wisniewski 1989 however the evolution of price quality data available from consumer reports over the last 15 years seems to reveal a reduction of the quality gap between store brands and national brands while price differences remain substantial simultaneously the share of private label brands has increased progressive grocer 1994 in this context we study whether we can maintain a view of the world where national brands may easily attract consumers from store brands through promotions whereas store brands are relatively ineffective in attracting consumers from national brands by such means we analyze consumer reactions to price discounts in a parsimonious preference model featuring loss aversion and reference dependence along dimensions of price and quality hardie johnson and fader 1993 tversky and kahneman 1991 the key result of our analysis is that given any two brands there is an asymmetric promotion effect in favor of the higher quality higher price brands if and only if the quality gap between the brands is sufficiently large in comparison with the price gap thus the direction of promotion asymmetry is not unconditional it depends uniquely on the value of the ratio of quality and price differences compared to a category specific criterion which we call if the ratio of quality and price differences is larger than this criterion the usual asymmetry prevails if such is not the case the lower quality lower price brands promote more effectively more precisely our model predicts that cross promotion effects depend on two components of brand positioning in the price quality quadrant first we define a variable termed positioning advantage that indicates whether relative to the standards achieved by another brand a given brand is underpriced positive advantage or overpriced negative advantage promotion effectiveness is increasing in this variable second cross promotion effects between two brands depend on their distance in the price quality quadrant this variable impacts promotion effectiveness negatively and symmetrically for any pair of brands positioning advantage and brand distance are orthogonal components of brand positioning irrespective of the degree of correlation between available price and quality levels in the market empirically we investigate the role of brand positioning in explaining cross promotion effects using panel data from the chilled orange juice and peanut butter categories we compute the independent positioning variables positioning advantage and brand distance from readily available data on price and quality positioning after obtaining our estimates of we next measure promotion effectiveness by estimating choice share changes in response to a price discount using a choice model that does not contain any information about quality price ratios finally we test the relation between the two positioning variables and the promotion effectiveness measures the data reveal that in the orange juice category lower quality lower price brands generally promote more effectively than higher quality higher price brands in the peanut butter data the opposite asymmetry holds in both cases inter brand promotion patterns are well explained by the positioning variables an attractive feature of our model is that in addition to the direction of promotion asymmetries it also explains the extent of those asymmetries a further interesting aspect of this approach is that we go beyond a categorization of brands into price tiers for instance lower tier brands in our data may promote more effectively than one national brand but less effectively than another consistent with our theoretical predictions the data presented here seem to confirm that such cases occur because the lower tier brand offers a favorable trade off of price and quality differences compared with one national brand and a less favorable trade off compared with the other the content of this paper is potentially relevant for brand managers or retailers concerned with predicting the impact of their promotions the paper is of particular interest to marketing scientists who study the performance of store brands versus national brands and may also appeal to those who wish to explore the marketing implications of behavioral decision theory finally our investigation does not reject blattberg and wisniewski s 1989 finding shared by allenby and rossi 1991 and hardie johnson and fader 1993 that national brands have a principle advantage in promotion effectiveness rather it formalizes when this principle advantage is overruled by positioning disadvantages of such brands

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

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

money is privacy an extensive literature in monetary theory has emphasized the role of money as a record keeping device money assumes this role in situations where using credit would be too costly and some might argue that this role will diminish as the cost of information and thus the cost of credit based transactions continues to fall in this paper we investigate another use for money the provision of privacy that is a money purchase does not identify the purchaser while a credit purchase does in a simple trading economy with moral hazard the efficiency of money is compared with that of credit and we find that money may be useful even when information is free

the impact of bse on the demand for beef and other meats in great britain indices of media coverage of bse are incorporated in a dynamic aids model of meat demand the publicity which bse has received is found to have had significant effects on the allocation of consumer expenditure among the meats a short run impact has been identified which accounts in large part for the discernible drop in the market share of beef in the early 1990s and more important there also appears to be a significant long run impact of bse which by the end of 1993 has reduced the beef market share by 4 5

competitiveness through management of diversity effects on stock price valuation this study s premise is that firms that can lower their costs and enhance their differentiation through the effective management of their human resources have a competitive advantage using data fr

impacts of meat product recalls on consumer demand in the usa the impact of meat product recall events on consumer demand beef pork poultry and other consumption goods in the usa is tested empirically beef pork and poultry recall indices are constructed from both the food safety inspection service s meat recall events and from newspaper reports over the period 1982 1998 following previous product recall studies recall indices are incorporated as shift variables in consumers demand functions estimating an absolute price version of the rotterdam demand model findings indicate that food safety inspection service s meat recall events significantly impact demand and newspaper reports do not moreover although elasticities related to recall events are significant they are small in magnitude relative to price and income effects any favourable effects on the demands of meat substitutes for a recall are offset by a more general negative effect on meat demand the general negative effect indicates a shift out of meat to non meat consumption goods

structural modeling and policy simulation a primary goal of research in marketing is to evaluate and recommend optimal policies for marketing actions or instruments in the terminology of franses 2005 in this respect marketing is a very policy oriented field and it is ironic that so much published research skirts the issue of policy evaluation franses s article draws much needed attention to the question of what sort of model is usable for policy simulation and evaluation our perspective on what constitutes a valid model for policy evaluation differs from franses s view but we believe our view complements his in many important respects we also strongly believe that marketing has much to contribute to the literature on structural modeling we outline some of what we believe are the advantages for marketing scholars of using structural modeling for policy evaluations and some of the challenges presented by marketing problems franses focuses on a reduced form sales response model in which the outcome variable yt is modeled conditional on marketing variables xt if customers anticipate future marketing actions and take these into account in responding to the environment at time t an additional equation is appended to the system to describe the evolution of the xt variables in franses s view this system can be used for policy simulation if both the y and x equations have timeinvariant parameters that is the lucas critique which implies that parameters of reduced form models change if the policy regime changes does not apply according to franses a model must pass standard diagnostics possess good predictive properties and exhibit parameter stability to be useful for policy simulation we applaud the attention franses is bringing to model diagnostics we believe that structural work in both marketing and economics should pay close attention to the central features of the data increased use of model diagnostics will help ensure that structural models are capable of capturing these features however we do not believe that all the criteria proposed by franses such as out of sample validity and parameter stability are either necessary or sufficient to render a model useful for policy simulation reduced form models can pass all diagnostics including out of sample validation and still provide misleading predictions about the effects of policy changes reduced form

natural resource management and household well being the case of posaf ii in nicaragua summary measuring the impact of natural resource programs is a key element in the formulation and implementation of policies designed to promote farm income while enhancing the quality of the surrounding environment in this paper we analyze the economic impact of natural resource technologies delivered by the socio environmental and forestry development program ii posaf ii in nicaragua we use cross sectional data for 1 483 households from 212 treated and control communities results obtained from propensity score matching psm ordinary least squares ols weighted least squares regression wls based on psm and instrumental variables iv regression indicate that posaf ii has had a positive impact on the total value of agricultural production of beneficiary farmers an internal rate of return analysis supports the hypothesis that increasing household income while encouraging the sustainable use of natural resources through the implementation of suitable management programs can be complementary development objectives

asymmetric and neighborhood cross price effects some empirical generalizations this paper provides some empirical generalizations regarding how the relative prices of competing brands affect the cross price effects among them particular focus is on the asymmetric price effect and the neighborhood price effect the asymmetric price effect states that a price promotion by a higher priced brand affects the market share of a lower priced brand more so than the reverse the neighborhood price effect states that brands that are closer to each other in price have larger cross price effects than brands that are priced farther apart the main objective of this paper is to test if these two effects are generalizable across product categories and to assess which of these two effects is stronger while the neighborhood price effect has not been rigorously tested in past research the asymmetric price effect has been validated by several researchers however these tests of asymmetric price effect have predominantly used elasticity as the measure of cross price effect the cross price elasticity measures the percentage change in market share or sales of a brand for 1 change in price of a competing brand we show that asymmetries in cross price elasticities tend to favor the higher priced brand simply because of scaling effects due to considering percentage changes furthermore several researchers have used logit models to infer asymmetric patterns we also show that inferring asymmetries from conventional logit models is incorrect to account for potential scaling effects we consider the absolute cross price effect defined as the change in market share percentage points of a target brand when a competing brand s price changes by one percent of the product category price the advantage of this measure is that it is dimensionless hence comparable across categories and it avoids scaling effects we show that in the logit model with arbitrary heterogeneity in brand preferences and price sensitivities the absolute cross price effect is symmetric we develop an econometric model for simultaneously estimating the asymmetric and neighborhood price effects and assess their relative strengths we also estimate two alternate models that address the following questions i if i were managing the ith highest priced brand which brand do i impact the most by discounting and which brand hurts me the most through price discounts ii who hurts whom in national brand vs store brand competition based on a meta analysis of 1 060 cross price effects on 280 brands from 19 different grocery product categories we provide the following empirical generalizations 1 the asymmetric price effect holds with cross price elasticities but tends to disappear with absolute cross price effects 2 the neighborhood price effect holds with both cross price elasticities and absolute cross price effects and is significantly stronger than the asymmetric price effect on both measures of cross price effects 3 a brand is affected the most by discounts of its immediately higher priced brand followed closely by discounts of its immediately lower priced brand 4 national brands impact store brands more so than the reverse when the cross effect is measured in elasticities but the asymmetric effect does not hold with absolute effects store brands hurt and are in turn hurt the most by the lower priced national brands that are adjacent in price to the store brands 5 cross price effects are greater when there are fewer competing brands in the product category and among brands in nonfood household products than among brands in food products the implications of these findings are discussed

credit and identity theft abstract the quintessential crime of the information age is identity theft the malicious use of personal identifying data in this paper we model identity and its use in credit transactions various types of identity theft occur in equilibrium including new account fraud existing account fraud and friendly fraud the equilibrium incidence of identity theft represents a tradeoff between a desire to avoid costly or invasive monitoring of individuals on the one hand and the need to control transactions fraud on the other our results suggest that technological advances will not eliminate this tradeoff

optimal pricing of payment services abstract payments are increasingly being made with payment cards despite the fact that the cost of clearing a card payment usually exceeds the cost of transferring cash we examine this puzzle through the lens of monetary theory we consider the design of an optimal card based payment system when cash is available as an alternative means of payment we find that a feature akin to the controversial no surcharge rule may be necessary to ensure the viability of the card payment system this rule states that merchants cannot charge a customer who pays by card more than a customer who pays by cash

social norms and money abstract in an economy where there is no double coincidence of wants and without public record keeping of past transactions money is usually seen as the only mechanism that can support exchange in this paper we show that as long as the population is finite and agents are sufficiently patient a social norm establishing gift exchange can substitute for money however for a given discount factor population growth eventually leads to the breakdown of the social norm additionally increases in the degree of specialization in the economy can also undermine the social norm by contrast monetary equilibrium exists independent of the population size we conclude that money is essential as a medium of exchange when the population is large

money and credit redux do we need both money and credit in models with explicit roles for payment instruments we show the answer is no if credit is easy money is useless if credit is tight money can be essential but then credit is irrelevant and changes in debt limits are neutral real balances respond endogenously to leave total liquidity constant this is true for exogenous or endogenous policy and debt limits secured or unsecured credit and fairly general preferences and pricing mechanisms while we also show how to overturn some results the benchmark model suggests credit conditions matter less than some people think

comments on competitive responsiveness marketing science features many and diverse articles that analyze competitive responsiveness although recent marketing science editorials e g shugan 2002 suggest that competitive responsiveness is only a part of a comprehensive competitive marketing strategy it remains a vital part for that reason and many others marketing science is particularly proud of this special issue edited by david j reibstein and dick r wittink before introducing and vigorously applauding both the editors and authors of this excellent special issue we emphasize that competitive responsiveness raises numerous issues including whether one can forecast outcomes of new policies based on past observations made under old policies i e the lucas critique and decisions regarding which variables should be considered endogenous shugan 2004 i e determined within the model perhaps normative models are inherently perishable evolution in market structure requires modifications over time also although complete consistency within the world of the model is aesthetically pleasing imposing industry specific exogenous constraints that might appear unrelated to the modeling assumptions is sometimes necessary

links between rural poverty and the environment in developing countries asset categories and investment poverty abstract this paper presents a framework for analyzing the links between poverty and the environment in rural areas of developing countries it introduces the concept of investment poverty and relates it to other measures of poverty in analysis of these links the notion of poverty is examined in the context of categories of assets and categories of environment change with particular focus on farm household income generation and investment strategies as determinants of the links the strength and direction of the poverty environment links are shown to differ even invert depending on the composition of the assets held by the rural poor and the types of environmental problems they face policy strategies need to focus on conditioning variables that affect market development community wealth infrastructure household asset distribution and the affordability and appropriateness of natural resource conservation technologies

determinants of banks risk exposure to new account fraud evidence from germany abstract this paper studies empirically the determinants of new account fraud risk within two dimensions the probability of fraud and the expected and unexpected monetary loss per account due to fraud by fraud risk we mean the risk that a bank fails to enforce a debt because the identity of the person incurring the debt cannot be ascertained using a unique and rich data set of account applicants provided by a german internet only bank we find that fraud risk is highly sensitive to demographic and socio economic variables like nationality gender marital status age occupation and urbanisation for example foreigners are 22 25 times more likely to commit account fraud than germans and men are 2 5 times more risky than women

testing for the lucas critique a quantitative investigation this thesis contains four essays which studies the macroeconomic effects of fiscal and monetary policy quantitatively the first essay investigates whether swedish postwar business cycles have been generated by domestic or foreign shocks and finds that they are about equally important in the second essay the effects of government budget deficits on interest rates in sweden are studied in a small open economy framework the empirical results which have high power due to very large swings in deficits and interest rates provide support that larger deficits produce higher interest rates and thus give support against the ricardian view the third essay seeks to identify optimal social insurance and redistribution levels in sweden and the u s with respect to temporary and permanent idiosyncratic productivity risks the results indicate that sweden should reduce the social security level while the u s should approximately maintain the current level in the last essay the small sample properties of a well known statistical test for the lucas critique the super exogeneity test is studied in a general equilibrium environment the results indicate that the super exogeneity test do not have sufficient power in small samples

the corporate social responsibility of pharmaceutical product recalls an empirical examination of u s and u k markets the pressure on companies to practice corporate social responsibility csr has gained momentum in recent times as a means of sustaining competitive advantage in business the pharmaceutical industry has been acutely affected by this trend while pharmaceutical product recalls have become rampant and increased dramatically in recent years no comprehensive study has been conducted to study the effects of announcements of recalls on the shareholder returns of pharmaceutical companies as product recalls could significantly damage a company s reputation profitability and brand integrity this paper investigates the effect on shareholder wealth and the extent to which the adoption of csr practices by pharmaceutical companies in the united kingdom u k and the united states u s the two largest markets for pharmaceutical products in the world affected market reactions surrounding product recall announcements the analysis of product recall announcements from 1998 to 2004 compiled from the pharmaceutical journal and u s food and drug administration enforcement reports revealed marked differences in the way market participants in the two countries responded to news of product recalls u s investors penalised firms according to the severity of product defects while u k investors were indifferent while u k investors rewarded product recalls by firms which were not usually csr active u s investors punished non csr active firms that performed recalls these observations could pose strategic challenges to pharmaceutical firms operating in both countries

on money as a medium of exchange we analyze economies in which individuals specialize in consumption and production and meet randomly over time in a way that implies that trade must be bilateral and quid pro quo nash equilibria in trading strategies are characterized certain goods emerge endogenously as media of exchange or commodity money depending both on their intrinsic properties and on extrinsic beliefs there are also equilibria with genuine fiat currency circulating as the general medium of exchange we find that equilibria are not generally pareto optimal and that introducing fiat currency into a commodity money economy may unambiguously improve welfare velocity acceptability and liquidity are discussed

credit reporting financial intermediation and identification systems international evidence abstract credit reporting systems are an important ingredient for financial markets these systems are based upon the unique identification of borrowers which is enabled if a compulsory national identification system exists in a country we present evidence derived from difference in difference analyses on the impact of credit reporting and identification systems on financial intermediation in 172 countries between 2000 and 2008 our results suggest that the introduction of a mandatory identification system has a positive effect on financial intermediation bank credit to deposits net interest margins and financial access private credit to gdp especially in countries where there is also a credit reporting system

generalizing what is known about temporal aggregation and advertising carryover this paper provides a theoretical explanation for the inconsistent findings from previous econometric analyses of aggregated data concerning the duration of advertising carryover using this theoretical explanation and the knowledge of a data interval bias the paper reviews and summarizes the empirical work in the area of sales response modeling and then after adjusting for aggregation bias presents support for an empirical generalization that the average advertising duration interval is of brief duration typically between six and nine months

a hierarchical bayes error correction model to explain dynamic effects of price changes abstract the authors put forth a sales response model to explain the differences in immediate and dynamic effects of promotional prices and regular prices on sales the model consists of a vector autoregression that is rewritten in error correction format which allows the authors to disentangle the immediate effects from the dynamic effects in a second level of the model the immediate price elasticities the cumulative promotional price elasticity and the long term regular price elasticity are correlated with various brand specific and category specific characteristics the model is applied to seven years of data on weekly sales of 100 different brands in 25 product categories the authors find many significant moderating effects on the elasticity of price promotions brands in categories that are characterized by high price differentiation and that constitute a lower share of budget are less sensitive to price discounts deep price discounts increase the immediate price sensitivity of customers the

money and dynamic credit arrangements with private information abstract we construct a model with private information in which consumers write dynamic contracts with financial intermediaries a role for money arises due to random limited participation of consumers in the financial market without defection constraints a friedman rule is optimal the mean and variability of wealth tend to fall with inflation in the steady state and the welfare effects of inflation are very small with defection constraints the effects of inflation on the distribution of welfare and consumption are large but the effect on average welfare is still small the relaxation of defection constraints resulting from higher inflation can cause a substantial increase in the real interest rate journal of economic literature classification numbers d8 e4 g2

corporate environmental initiatives in the chinese context performance implications and contextual factors although a number of studies have been conducted on the relationship between environmental management and firm performance most of them are conducted in the western context due to the unique social and economic environments in china the performance implications of environmental management might be quite different in the chinese context we examine the impact of corporate environmental initiatives ceis on the market value of firms in china we find that in contrast to the findings in the western context chinese investors react negatively to cei announcements the negative reaction is more significant when the announcements are related to processes rather than products and for state owned enterprises rather than privately owned corporations however there is no difference whether the cei is self declared or third party endorsed overall our research indicates that chinese investors consider ceis to be in conflict with shareholder interest in particular ceis in state owned enterprises might be considered by investors as signals that firms need to sacrifice profits to shoulder more social responsibility

market incentives for safe foods an examination of shareholder losses from meat and poultry recalls meat and poultry recalls while voluntary are carried out under governmental oversight if firms have financial incentives to avoid being implicated in a recall situation governmental involvement in recalls may cause firms to internalize social costs when making investment decisions concerning food safety controls to examine these incentives we analyze federally supervised meat and poultry recalls from 1982 to 1998 within an event study results show significant shareholder losses when publicly traded food companies are implicated in a recall involving serious food safety hazards we find no evidence that the stock market reacts negatively when recalls involve less severe hazards each year unsafe foods sicken millions and lead to losses in terms of life and productivity mead et al estimate that foodborne pathogens account for 76 million illnesses and 5 000 deaths in the united states given human error and the limitations of food safety technology food items that pose undue risks to the public will be distributed from time to time when this occurs the firms involved stand to incur expenses related to recovering disposing of or reconditioning potentially contaminated products already placed on the market in addition negative publicity can lead to reductions in product demand and may erode prior investments in reputation and brand capital these firms may also face costs from liability claims associated with an outbreak of food related illnesses or injury our main objective in this paper is to examine reductions in food company valuations that result from food contamination incidents we focus specifically on meat and poultry firms that have shipped products that were later recalled for food safety reasons because preventative actions taken by firms can affect the probability of being implicated in a product recall situation the wealth that is lost when companies are required to recall

assessing poverty deforestation links evidence from swat pakistan abstract this paper contributes to the debate on the links between poverty and forestry degradation the view that due to poverty and the meeting of subsistence needs the poor use natural resources more intensively and hence cause them to degrade using the case of the forest rich swat district pakistan the paper addresses the issue empirically historically and institutionally we do not find empirical support for the poverty environment nexus in that the poor and other income groups are equally resource dependent and also show that resource degradation is not associated with poverty our historical and institutional analyses provide alternative explanations for resource degradation selective and rotating ownership patterns starting with the 17th century provided limited incentive for resource conservation it also created tension between de jure and de facto owners that has persisted and is one source of forest degradation ill defined resource rights have also exacerbated the impacts of several other factors contributing to forest degradation which is compounded by poor management corruption and perverse incentives

environmental externalities and immiserizing structural changes in an economy with heterogeneous agents the way in which natural and physical capital are accumulated distributed and harnessed underpins the functioning and sustainability of the productive system of each society as well as its social stratification significant changes in the interactions between natural and physical capital accumulation give rise to processes of structural change sc which affect not only sectoral composition of the productive system but also social equity and environmental quality we propose a taxonomy of different scs on the basis of distributive environmental and economic outcomes and we study a two sector model with environmental externalities to identify under which conditions each sc can occur our model shows how the type of sc is shaped by the link between agents heterogeneity in terms of productive asset endowment and their vulnerability to environmental degradation in particular we find that a sc associated with reduction in poverty and in environmental pressures can occur only if productivity of the physical capital intensive sector increases but its rate of environmental impact remains relatively lower than that of the natural capital intensive sector

effects of demographic and related microeconomic change on land quality in hills and mountains of developing countries abstract more than 70 empirical studies indicate that local population growth and its microeconomic manifestations in hills and mountains of developing countries do not necessarily threaten forest production agriculture livestock production or watershed stability population growth can make the cost of land relative to labor increase as this cost increases people often change their methods of managing economic plants and animals and make land improvements to offset initial declines in productivity that result from more frequent use of land thus the relationship between land productivity and relative land labor costs often resembles a u halting population growth or removing people from well settled areas might not improve productivity or reduce some off site damages

poverty and environment in latin america concepts evidence and policy implications abstract who is responsible for the ongoing degradation of natural resources such as agricultural soils rangeland and forests evidence from across latin america suggests that the nonpoor and the poor are both at fault while the poor lack the means to invest in protecting natural resources both the nonpoor and the poor often lack the incentives for good resource stewardship policies for agricultural intensification and livelihood diversification can alleviate poverty and its capacity constraint but incentive policies for good stewardship are critically needed such policies should be targeted to specific environmental problems and tailored to the motivations of rural decision makers

poverty alleviation and tropical forests what scope for synergies abstract this paper explores the state of the art of the two way causal links between poverty alleviation and natural tropical forests microimpacts of rising poverty can increase or slow forest loss at the macrolevel poverty also has an ambiguous effect but it is probable that higher income stimulates forest loss by raising demand for agricultural land the second question is what potential forest led development has to alleviate a country s poverty in terms of producer benefits consumer benefits and economy wide employment natural forests widely serve as safety nets for the rural poor but it proves difficult to raise producer benefits significantly urban consumer benefits from forest an important target for pro poor agricultural innovation are limited and seldom favor the poor absorption of poor unskilled labor is low in forestry which tends to be capital intensive natural forests may thus lack comparative advantage for poverty alleviation there are few win win synergies between natural forests and national poverty reduction which may help to explain why the loss of tropical forests is ongoing this may have important implications for our understanding of sustainable forest development and for the design of both conservation and poverty alleviation strategies

the long term effects of price promotions on category incidence brand choice and purchase quantity abstract to what extent do price promotions have a long term effect on the components of brand sales namely category incidence brand choice and purchase quantity the authors answer this question by using persistence modeling on weekly sales data of a perishable and a storable product derived from a scanner panel their analysis reveals first that permanent promotion effects are virtually absent for each sales component next the authors develop and apply an impulse response approach to estimate the promotional adjustment period and the total dynamic effects of a price promotion specifically they calculate the long term equivalent of gupta s 1988 14 84 2 breakdown of promotional effects because of positive adjustment effects for incidence but negative adjustment effects for choice the authors find a reversal of the importance of category incidence and brand choice 66 11 23 for the storable product and 58 39 3 for the perishable product the authors discuss the implications of the findings an

currency and credit are equivalent mechanisms i study a pure exchange economy with many agents whose marginal utility of consumption is stochastically heterogeneous and independent of wealth with realized marginal utility of wealth private information i show that currency and credit are equivalent to a contract that is efficient when the privacy of information is viewed as a constraint and that the cash in advance constraint is an expression of an incentive constraint

a model of the threat of counterfeiting abstract a simple matching model of money with the potential for counterfeiting is constructed in contrast to the existing literature lotteries are included these provide scope for the operation of the intuitive criterion of cho and kreps the application of that refinement is shown to imply that there is no equilibrium with counterfeiting if the cost of producing counterfeits is low enough then there is no monetary equilibrium otherwise there is a monetary equilibrium without counterfeiting in other words the threat of counterfeiting can eliminate the monetary equilibrium

data breaches and identity theft abstract an environment is analyzed in which agents join clubs payment networks in order to facilitate trade the networks compile personal identifying data pid so as to match transactors to transactions histories technological limitations cause the networks data management practices to impact each other s incidence and costs of identity theft too much data collection and too little security arise in equilibrium with noncooperative networks compared to the efficient allocation a number of potential remedies are analyzed 1 reallocations of data breach costs 2 mandated security levels and 3 mandated limits on the amount of data collected

incomplete record keeping and optimal payment arrangements abstract we study a random matching absence of double coincidence environment in which people cannot precommit and in which there are two imperfect ways to keep track of what other people have done in the past money and a public record of all past actions that is updated with an average lag we study how the magnitude of that lag affects the allocations that are optimal from among allocations that are stationary and feasible and that satisfy incentive constraints which arise from the absence of commitment and the imperfect ways of keeping track of what others have done in the past journal of economic literature classification numbers e40 c73 d82

the impact of a product harm crisis on marketing effectiveness product harm crises are among a firm s worst nightmares a firm may experience i a loss in baseline sales ii a reduced own effectiveness for its marketing instruments iii an increased cross sensitivity to rival firms marketing mix activities and iv a decreased cross impact of its marketing mix instruments on the sales of competing unaffected brands we find that this quadruple jeopardy materialized in a case study of an australian product harm crisis faced by kraft peanut butter we arrive at this conclusion by using a time varying error correction model that quantifies the consequences of this crisis on base sales and on own and cross brand short and long term effectiveness the proposed modeling approach allows managers to make more informed decisions on how to regain the brands pre crisis performance levels

the tylenol incident ensuing regulation and stock prices the much publicized tylenol incident in 1982 led to stringent packaging regulations for over the counter pharmaceutical drugs the sudden incident and the swift progression of associated events offer a unique opportunity to assess the wealth effects of the resultant regulations the market value of common stock of johnson johnson makers of tylenol declined by approximately 29 percent amounting to 2 31 billion although other firms in the industry also suffered significantly their share price decline did not occur around the tylenol incident but occurred around the subsequent packaging reg ulation proceedings on average 28 other pharmaceutical firms analyzed in this study experienced a decline of 310 million per firm or a total of about 8 68 billion the results suggest that the regulation had a significant negative effect on the common stock prices of firms in the pharmaceutical industry

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

money is memory abstract this paper examines the sets of feasible allocations in a large class of economic environments in which commitment is impossible following myerson 8 the standard definition of feasibility is adapted to take account of the lack of commitment the environments feature either memory or money memory is defined as knowledge on the part of an agent of the full histories of all agents with whom he has had direct or indirect contact in the past money is defined as an object that does not enter utility or production functions and is available in fixed supply the main proposition is that any allocation that is feasible in an environment with money is also feasible in the same environment with memory depending on the environment the converse may or may not be true hence from a technological point of view money is equivalent to a primitive form of memory journal of economic literature classification numbers e40 c73 d82

liquidity a new monetarist perspective this essay surveys the new monetarist approach to liquidity work in this literature strives for empirical and policy relevance plus rigorous foundations questions include what is liquidity is money essential in achieving desirable outcomes which objects can or should serve in this capacity when can asset prices differ from fundamentals what are the functions of commitment and collateral in credit markets how does money interact with credit and intermediation what can and should monetary policy do the research summarized emphasizes the micro structure of frictional transactions and studies how institutions like monetary exchange credit arrangements or intermediation facilitate the exchange process

the decomposition of promotional response an empirical generalization price promotions are used extensively in marketing for one simple reason consumers respond the sales increase for a brand on promotion could be due to consumers accelerating their purchases i e buying earlier than usual and or buying more than usual and or consumers switching their choice from other brands purchase acceleration and brand switching relate to the primary demand and secondary demand effects of a promotion gupta 1988 captures these effects in a single model and decomposes a brand s total price elasticity into these components he reports for the coffee product category that the main impact of a price promotion is on brand choice 84 and that there is a smaller impact on purchase incidence 14 and stockpiling 2 in other words the majority of the effect of a promotion is at the secondary level 84 and there is a relatively small primary demand effect 16 this paper reports the decomposition of total price elasticity for 173 brands across 13 different product categories on average we find that 25 of the elasticity is due to primary demand expansion i e purchase acceleration and 75 to secondary demand effects or brand switching thus while gupta s finding that the majority of promotional response stems from brand switching is supported the average magnitude of the effect appears to be smaller than first thought more important there is ample evidence that promotions have a significant primary demand effect the relative emphasis on purchase acceleration and brand switching varies systematically across categories and the second goal of the paper is to explain this variation as a function of exogeneous covariates in doing this we recognize that promotional response is the consumer s reaction to a price promotion and therefore develop a framework for understanding variability in promotional response that is based on the consumer s perspective of the benefits from a price promotion these benefits are posited to be a function of i category specific factors ii brand specific factors and iii consumer characteristics the framework is formalized as a generalized least squares meta analysis in which the brand s price elasticity is the dependent variable several interesting results emerge from this analysis category specific factors brand specific factors and consumer demographics explain a significant amount of the variance in promotional response for a brand at both the primary and secondary demand levels category specific factors have greater influence on variability in promotional response and its decomposition than do brand specific factors there are several instances where exogenous variables do not affect total elasticities yet significantly affect individual components of total elasticity in fact the lack of a significant relationship between the variables and total elasticity is often due to offsetting effects within two or more of the three behavioral components of elasticity this is particularly true for brand specific factors which typically have no effect on total elasticity yet have important effects on the individual behaviors there is some evidence to suggest that not all promotion related increases in primary demand are due to forward buying in some cases promotions appear to increase consumption we use these results to illustrate how category and brand specific factors work to drive primary and secondary demand elasticities in different directions in short this paper offers an empirical generalization of a key finding on promotional response how elasticities decompose across brand choice purchase incidence and stockpiling and new insights into factors that explain variance in promotional response these findings are likely to be of interest to researchers who are concerned with theory development and the generalizability of marketing phenomena and to managers who plan promotion campaigns

the financial impact of product recall announcements in china abstract a product recall can be viewed as a firm s worst nightmare although the long term damage to brand equity and company reputation may be difficult if not impossible to quantify the short term impact on shareholders wealth is readily estimable while many studies have examined this issue in the western context little is known about the financial impact of a product recall announcement in china to advance the knowledge about the financial impact of a product recall announcement we explore this issue using event study methodology in general our findings are congruent with previous research that product recalls result in negative abnormal returns interestingly however we found that chinese companies suffered from greater financial losses than their western counterparts did this study also provides evidence that the chinese food industry experiences a more severe stock market reaction than the automobile industry and that a passive recall strategy was associated with a more negative stock market reaction than a proactive recall strategy we conclude with several future research avenues for global research on product recalls

the liability of good reputation a study of product recalls in the u s automobile industry in this paper we explore opposing theoretical claims about how organizational reputation affects market reactions to product defects on the one hand good reputation could be a disadvantage because expectations about product quality are more likely to be violated by defects in highly reputed products on the other hand a good reputation could be an advantage because of strong inertial effects on reputation orderings we empirically test these competing hypotheses using data on product recalls in the u s automobile industry from 1975 to 1999 our results support for the idea that reputation can be an organizational liability in that highly reputed firms suffer more market penalty as a result of their product recalls we also propose that the reputational effects are moderated by two important factors substitutability and generalism specialism our results show that having few substitutes with an equivalent level of reputation or a focused product identity stemming from specialism buffers the negative market reactions to product recalls we conclude with a discussion on the implications of these results for institutional reputation and status theories