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

the relationship between market characteristics and promotional price elasticities many empirical studies in marketing and economics have estimated brand price elasticities for specific products in markets their results indicate that price elasticities seem to differ across brands product categories retail outlets and regions however there has been very little research which examines the factors associated with these observed differences this paper focuses on the promotional price elasticities of established major brands in stable categories it identifies some characteristics of markets which may be associated with differences in price elasticities for frequently purchased nondurables a cross sectional model of the effect of these market characteristics on price elasticities is developed and estimated utilizing own price elasticity estimates for brands at twelve stores the results indicate market characteristics such as brand market share couponing activity display activity and feature activity explain a substantial amount of the variation in promotional price elasticities

an analysis of the tradeoff between advertising and price discounting the authors examine an important influence on the price advertising tradeoff the ratio of price and advertising elasticities their theoretical analysis stresses the centrality of the elasticity r

justice to the australians my acknowledged debt to gary j manger is so great that i fear to register any dissent lest i seem an ingrate therefore i stay with a few truths that relate to his concerns 1 1 by 1920 it was high time to replace the labor only model of ricardo mill classicism by the formal ohlin haberler and other multi factor extensions already ricardo torrens and malthus recognized that the corn laws could raise landowners share in english national income a phenomenon not relevant to the 1 factor only formal model the 1925 1931 australian discussions similarly deviated into good sense before international trade theory had in manger s happy phrase shifted intellectual gears tom kuhn must realize that in real life scientists work with more than one paradigm at a time including some still getting born and perceived 2 ohlin s recognition of oversimplification in purchasingpower theory will be seen on reflection to be logically and empirically unrelated to the inadequacies of the labor only models similarly mill s recognition that international values cannot accord with labor values is not a point against a model involving labor alonein each country it is a valid deduction about such a classical model in short as kuhn can document a new and better paradigm may be motivated by criticisms of an old paradigm that are themselves confused and even wrong 3 frederic benham s 1935 paper on how factor prices and goods prices are related is a quantum advance in the post heckscher literature his jousts with bridgen on marion samuelson s problem do not win for him from me manger s high marks but when have teachers been unanimous in making out report card grades 4 manger earns our praise for throwing new light on basic advances in the theory of international trade my reservations which are minor hope to guard against awarding excessive credit to post1938 writers

explaining the fame of friedman s presidential address it is noted that although in fact it lacks the revolutionary content commonly ascribed to it friedman s presidential address to the american economic association is very highly regarded as an original and formative contribution it is argued that close attention to the literature shows that it was not initially seen as original and only after an interval of five years did the idea of its revolutionary status retrospectively but suddenly become widely accepted the explanation of this change of view is considered four explanations are suggested one involving terminological confusion one involving a change in theoretical priorities and two involving debates of the 1970s which although they did not in fact do so appeared to build on friedman s presentation and by this appearance gave it an undeserved stature

trade protectionism in australia its growth and dismantling protection from import competition was a defining feature of the birth of the australian federation in 1901 for the next 70 years the extent of protection grew and broadened from mainly tariffs to also involving import licencing after world war ii there was a one off 25 across the board cut in tariffs in 1973 and some dismantling of agricultural subsidies but that was followed by the re imposition of import quotas for the most protected manufactured goods then in the mid 1980s a new reformist government began a long process of dismantling all protection as part of an overall economic reform program that also involved de regulation privatization and moving to a flexible exchange rate the rewards included three decades of faster economic growth and an unprecedented rise in australians living standards this paper provides a history of economic thought on the pros and cons of protectionism for the small distant natural resource rich australian economy and a survey of the literature on the extent effects and political economy reasons behind the growth of australian protection and its eventual dismantling

estimating elasticities with pims data methodological issues and substantive implications though the pims data have been used extensively to relate profitability both to specific firm marketing actions and to market conditions no attempt has been made to estimate directly the magnitudes of marketing mix elasticities the authors propose and evaluate a simple cross sectional time series regression method that recovers unbiased estimates of the elasticities despite the presence of firm specific disguise factors in the database though measurement error creates instability for certain variables the recovered elasticities compare favorably with those found in previous research and have predictable relationships with market characteristics

what was the message of friedman s presidential address to the american economic association it is widely accepted that the importance of friedman s presidential address to the american economic association lies in its criticism of policy based on the phillips curve however it is argued here that a reading of the text does not support such a view and this and other considerations suggest that any such aim was far from friedman s mind in 1967 his objective was the quite different one of making a case for policy rules rather than discretion

product variety informative advertising and price competition abstract in many product categories consumer tastes are diverse and firms use finely targeted advertising to inform consumers about their products this article proposes a model of informative advertising that allows for diverse consumer tastes and multiple competing firms using this framework the authors analyze how diversity in consumers tastes informative advertising and improvements in advertising technology may influence prices first informative advertising can lead to lower prices if consumer valuations are high however if consumer valuations are low informative advertising can lead to higher prices second when consumer valuations are high price increases with greater diversity in tastes though this result reverses if consumer valuations are low third improvements in advertising technology lead to higher levels of advertising when consumer valuation is high but the opposite effect can occur when consumer valuation is low the authors relate these theoretical findings to previous e

summing up on the australian case for protection in 1929 a quasi official report by several eminent australian economists the australian tariff an economic inquiry by j b brigden d p copland e c dyason l f giblin and c h wickens set off analytical controversy that has helped shape the discovery of what has come to be known as modern international trade theory i had thought that this whole topic was satisfactorily understood by informed scholars and could be honorably deposited on the shelf of closed history g j manger 1976 has however uncovered some interesting puzzles since marion crawford samuelson who played a key role forty years ago in the theoretical developments is not here to consult on doubtful matters of memory i recently spent an afternoon in the harvard college libraries reviewing the principal scholarly contributions quite aside from manger s interesting issues the exercise was a rewarding one for here is a drama that involved many of the great names of our subject ricardo 1815 1823 and malthus 1815 torrens 1815 and stuart mill 1848 sidgwick 1883 edgeworth 1897 and bastable 1897 and i seem to recall nicholson and carver simon patten 1890 and taussig marshall 1879 and pigou 1906 as well as allyn young 1913 knight 1924 and robertson 1924 brigden 1925 1927a 1927b benham 1926 1927 1935 copland 1931 and frank graham 1923 heckscher 1919 and ohlin 1933 stolper and paul samuelson 1941 samuelson 1938 1939 as well as lerner 1952 and metzler 1949a 1949b karl anderson 1938 1939 and marion crawford samuelson 1939 corden 1957 reitsma 1958 1960 bhagwati and johnson 1961 vanek kemp and ronald jones 1962 and many others the story is worth telling both in its received and revised versions

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

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

inflation and unemployment the world economy today is vastly different from the 1930s when seymour harris the chairman of this meeting infected me with his boundless enthusiasm for economics and his steadfast confidence in its capacity for good works economics is very different too both the science and its subject have changed and for the better since world war ii but there are some notable constants unemployment and inflation still preoccupy and perplex economists statesmen journalists housewives and everyone else the connection between them is the principal domestic economic burden of presidents and prime ministers and the major area of controversy and ignorance in macroeconomics i have chosen to review economic thought on this topic on this occasion partly because of its inevitable timeliness partly because of a personal interest reaching back to my first published work in 1941

manufacturer allowances and retailer pass through rates in a competitive environment a commonly held belief has grocery and mass merchandise retailers gaining power relative to the upstream consumer package goods manufacturers one of the major justifications for this belief is that manufacturers are now giving retailers more side payments such as trade allowances slotting allowances etc however a number of researchers have shown that these concessions have not translated into increased profit for the retailer relative to the manufacturer this paper explores via an analytic model why one might see retailers getting concessions from the manufacturer without being able to translate them into high profits we do this by representing the interaction between the channel members as a one period profit maximizing game where manufacturers decide on how large a side payment i e a concession to give to each retailer and retailers decide on how much of this side payment to use to promote the manufacturer s product at the heart of our model is a demand function for each product offering i e a specific brand sold by a specific retailer this demand function is linear in own and other s prices but based on empirical evidence is assumed to be nonlinear in the effects of merchandising activities e g short term price discounts better shelf space advertising etc specifically merchandising effects are modeled with a square root function that also acknowledges most short term promotional effects result in brand or store switching versus increase category volume the model is composed of six parameters these are the inherent popularity of the brand at a particular outlet own price sensitivity cross but within the store price sensitivity customer s sensitivity to within store promotion activities customer s sensitivity to between store promotional activities and the degree to which promotional activities yield incremental product category sales we use our underlying demand formulation to find the equilibrium solution to the full information stackelberg leader game for different store and brand loyalty environments as captured by our six parameters these parameters are chosen based on empirical evidence to span possible market conditions that each channel member might have our findings and modeling efforts should be of interest to analytic channel modelers and scholars interested in the mass merchandising and grocery store industries for a theoretical point of view we build upon the case 4 model of lee and staelin 1997 to allow for promotional activities from a substantive point of view we show that manufacturers will freely give retailers side payments even though they know these retailers will pocket a substantial portion of this concession moreover we identify conditions within our model that lead to larger allowances lower pass through rates and lower retail profits outcomes that are compatible with recent industry trends in addition we highlight the difference in effect on profits prices etc of changes in consumers sensitivity to inter store differences in storewide merchandising activities one of the more counter intuitive results of these analyses is that it is in the manufacturer s best interest to help retailers increase their spatial monopoly by decreasing consumers tendency to cross store shop because of merchandising activities

the long term effect of marketing strategy on brand sales few studies have considered the relative role of the integrated marketing mix advertising price promotion product and place on the long term performance of mature brands instead emphasizing advertising and price promotion thus little guidance is available to firms regarding the relative efficacy of their various marketing expenditures over the long run to investigate this issue the authors apply a multivariate dynamic linear transfer function model to five years of advertising and scanner data for 25 product categories and 70 brands in france the findings indicate that the total short term plus long term sales elasticity is 1 37 for product and 74 for distribution conversely the total elasticities for advertising and discounting are only 13 and 04 respectively this result stands in marked contrast to the previous emphasis in the literature on price promotions and advertising the authors further find that the long term effects of discounting are one third the magnitude of the short term effects the ratio is reversed from other aspects of the mix in which long term effects exceed four times the short term effects underscoring the strategic role of these tools in brand sales

choice set heterogeneity and the role of advertising an analysis with micro and macro data abstract the authors show how to use microlevel survey data from a tracking study on brand awareness in conjunction with data on sales and advertising expenditures to improve the specification estimation and interpretation of aggregate discrete choice models of demand in a departure from the commonly made full information assumption they incorporate limited information in the form of choice sets to reflect that consumers may not be aware of all available brands at purchase time they find that both the estimated brand constants and the price coefficient are biased downward when consumer heterogeneity in choice sets is ignored these biased estimates can lead firms to make costly price setting mistakes in addition the tracking data enable the authors to identify separately two processes by which advertising influences market shares they find that advertising has a direct effect on brand awareness inclusion in choice set in addition to its effect on consumer preferences increase in utility this

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

toward a reconciliation of market power and information theories of advertising effects on price elasticity prior work on the economic effects of advertising has presented conflicting views some authors have suggested that advertising creates market power by artificially differentiating brands and thereby lowering price elasticity others have viewed advertising as an efficient source of information about the existence of substitutes arguing that advertising increases price elasticity the present research proposes a unifying theoretical model in which advertising affects price elasticity through its influence on two mediating constructs the size of the consideration set and the relative strength of preference pretests 1 and 2 examine the effects of advertising on these two constructs results from the main experiment show that in accordance with the theoretical framework the same advertisements that increased price elasticity in some decision environments decreased it in others