bluuebunny/crossref_metadata_2025 huggingface dataset:
New Product Pricing in Quality Sensitive Markets
Authors: Smith Stephen A.
Published: October 2008

This paper considers the problem of pricing a new product in a market having competing products of different qualities and market penetration levels, as measured by the cumulative number of units sold. Each customer type selects his optimal product based on maximizing consumer surplus. Pricing policies for a new product are determined for the seller based on cumulative profit maximization without discounting. An example is solved in detail for two demand function forms.
An Ideal-Point Probabilistic Choice Model for Heterogeneous Preferences
Authors: Kamakura Wagner A. , Srivastava Rajendra K.
Published: October 2008

This paper presents a new ideal point probabilistic choice model. Unlike the model suggested by Cooper and Nakanishi (Cooper, L. G., M. Nakanishi. 1983. Two logit models for external analysis of preferences. Psychometrika 48 (4) 607–619.) which attempts to capture choices via a single ideal point, the proposed model, though based on aggregate data, allows for heterogeneity in preferences by estimating a distribution of ideal points. The model accounts for substitutability among choice alternatives and alleviates one of the major sources for the violation of the “Independence from Irrelevant Alternatives” property. It is demonstrated that the final form of the model is a Multinomial Probit, with a covariance matrix that depends on the relative position of the choice alternatives. An empirical application is provided and the resulting parameters are compared to the distributions of ideal points and attribute weights obtained via LINMAP (at the individual level) and via both the Logit and Probit versions of the model proposed by Cooper and Nakanishi (at the aggregate level).
Modeling Response to Advertising and Pricing Changes for “V-8” Cocktail Vegetable Juice
Authors: Eastlack Joseph O. , Rao Ambar G.
Published: October 2008

This paper is based on a series of studies undertaken for “V-8” Cocktail Vegetable Juice over a five-year period. The studies were a consequence of management questions regarding the effectiveness of a new advertising campaign, the best media mix for this campaign and the apparent “wear-out” of the advertising copy. The studies included controlled experimentation, estimation of advertising response functions, and exploration of price sensitivity following major price increases by “V-8.” It was found that the short-term response to advertising was S-shaped, and that the new creative approach rather than expenditure levels alone accounted for by far the largest component of the impact of advertising on sales. It was also found that for a short period following the major price increases, “V-8” became extremely price sensitive. However, after about six months, the marginal impact of price returned to historical levels.

The application of results at Campbell Soup Company, their relationship to the literature and their implications for both researchers and practitioners are discussed.
Comment—On the Awareness Effects of Mere Distribution
Authors: Heeler Roger M.
Published: October 2008

Awareness forecasting models, such as those discussed in Mahajan, Muller, and Sharma (Mahajan, V., E. Muller, S. Sharma. 1984. An empirical comparison of awareness forecasting models of new product introduction. Marketing Sci. 3 (Summer) 179–197.), will be incomplete until they take account of the awareness effects of mere distribution. Distribution acts as both a main effect and as an interactive partner with advertising (and promotion) in the generation of awareness. Advertising in turn leads to distribution (Heeler et al. [Heeler, R. M., M. J. Kearney, B. J. Mehaffey. 1973. Modelling supermarket product selection. J. Marketing Res. 10 (February) 34–37.]).
Reply—Reflections on the Cost of Simplifying Preference Models
Authors: Hagerty Michael R.
Published: October 2008

Author's reply to comments by Johnson (Johnson, R. M. 1986. Commentary. Marketing Sci. 5 322.) and Greenberg (Greenberg, M. G. 1986. Commentary. Marketing Sci. 5 320–321.) about this paper (Hagerty, M. R. 1986. The cost of simplifying preference models. Marketing Sci. 5 298–319.).
A Probabilistic Model for the Multidimensional Scaling of Proximity and Preference Data
Authors: MacKay David B. , Zinnes Joseph L.
Published: October 2008

A probabilistic multidimensional scaling model that estimates both location and variance parameters for proximity and preference data is described and compared to a deterministic scaling model. Simulated and empirical choice data are used to compare models. Variance estimates from the probabilistic model are used to test a hypothesis about the homogeneity of stimulus perception under alternative modes of stimulus presentation.
Commentary
Authors: McMennamin John L.
Published: October 2008

MacKay and Zinnes (MacKay, D. B., J. L. Zinnes. 1986. A probabilistic model for the multidimensional scaling of proximity and preference data. Marketing Sci. 5 325–344.) refer to an exciting period in the late 1960's and early 1970's when MDS was promising new horizons in understanding consumer perceptions. To business, the intriguing aspect of MDS at that time was the orientation towards hypothesis generation. The similarity and dissimilarity judgments which consumers were asked to make produced a representation of brand, product, activity, or sensory material relationships that were not constrained by the preconceived dimensional limits of corporate analysts and managers.
Discrete Attribute Models of Brand Switching
Authors: Hutchinson J. Wesley
Published: October 2008

A formal analysis is presented for three general classes of discrete attribute models of brand switching. The analysis focuses on the role of feature importance in specifying transition probabilities. A number of formal properties based on ordinal relations between transition probabilities are defined and each class of models is shown to satisfy a unique subset of the properties. The analytic results reveal important relations between the functional forms of model equations and the managerially-oriented interpretations that are given to the variables in those equations.
Reply
Authors: Infosino William J.
Published: October 2008

Author's reply to comments (Morrison, D. G. 1986. Commentary. Marketing Sci. 5 385–386 and Pratt, R. W., Jr. 1986. Commentary. Marketing Sci. 5 387–388.) about his paper (Infosino, W. J. 1986. Forecasting New Product Sales from Likelihood of Purchase Ratings. Marketing Sci. 5 372–384.).
Reply—A Response to Malhotra's Comment on Testing the Homogeneity of Segments
Authors: Gensch Dennis H.
Published: October 2008

Author's response to the comment Malhotra, N. K. 1987. Testing the homogeneity of segments for estimating disaggregate choice models. Marketing Sci. 6 98–99.
Commentary
Authors: Frey John B.
Published: October 2008

Commentary about the article Dolan, R. J. 1987. Quantity discounts: Managerial issues and research opportunities. Marketing Sci. 6 1–22.
Commentary
Authors: Dietrich Donald G.
Published: October 2008

Commentary to Moore, W. L., R. S. Winer. 1987. A panel-data based method for merging joint space and market response function estimation. Marketing Sci. 6 25–42.
Comment—Testing the Homogeneity of Segments for Estimating Disaggregate Choice Models
Authors: Malhotra Naresh K.
Published: October 2008

Comment to Gensch, D. H. 1984. Targeting the switchable industrial customer. Marketing Sci. 3 (Winter) 41–54.
Modelling the Effectiveness and Profitability of Trade Promotions
Authors: Blattberg Robert C. , Levin Alan
Published: October 2008

Trade promotions have become an increasingly important element of the marketing mix. Yet, there is very little research describing how to measure the profitability and effectiveness of trade promotions. This paper describes how retailers behave when trade promotions are offered. Then, a model is developed to capture the two key components of the process: the consumer and the retailer. An example is given showing how to apply the model to actual manufacturer and retail sales data. Then estimates of the profitability for different items in a product category are calculated.

Many research questions are raised in this paper which can serve as future directions for research. Why are trade promotions generally unprofitable? How can scanner data improve the estimates given? How do different types of trade promotions affect the retailer and ultimately the consumer? Which brands and items should be trade promoted?
Commentary
Authors: Blitzer Herbert L.
Published: October 2008

Commentary to Rangan, V. K. 1987. The channel design decision: A model and an application. Marketing Sci. 6 156–174.
Reply
Authors: Sudharshan D. , May Jerrold H. , Shocker Allan D.
Published: October 2008

Reply to commentaries (Dodson, J. A., J. B. Brodsky. 1987. Commentary. Marketing Sci. 6 202–203 and Johnson, R. M. 1987. Commentary. Marketing Sci. 6 204–205.) to authors' paper (Sudharshan, D., J. H. May, A. D. Shocker. 1987. A simulation comparison of methods for new product location. Marketing Sci. 6 182–201.).
A Two-Stage Disaggregate Attribute Choice Model
Authors: Gensch Dennis H.
Published: October 2008

A two-stage disaggregate attribute choice model is proposed and empirically implemented. The first stage of the model is attribute processing to screen the number of alternatives down to a lesser number. The second stage is brand (alternative) processing which considers the attributes simultaneously while allowing for tradeoffs among the attributes.

This two-stage approach is then applied to the same real world data set as two single stage disaggregate models, logit and Maximum-Likelihood-Hierarchical (MLH) which are state of the art models representing the alternative and attribute processing approaches, respectively. The predictive accuracy of the two-stage approach compares favorably to the single stage models. In addition, it seems to offer diagnostic information that can provide managerial insights not found in the output of the single stage model.
Competitive Price and Quality Under Asymmetric Information
Authors: Tellis Gerard J. , Wernerfelt Birger
Published: October 2008

We present an analysis of equilibrium in markets with asymmetrically informed consumers. Some consumers know both price and quality of all sellers, whereas others know neither but may search among sellers. The equilibrium correlation between price and quality generally increases with the level of information in the market and can be negative when this level is sufficiently small. A meta-analysis of the available empirical studies strongly supports the model's predictions.
The Equity Estimator for Marketing Research
Authors: Krishnamurthi Lakshman , Rangaswamy Arvind
Published: October 2008

We introduce a new biased estimator called the Equity estimator to estimate parameters of linear models in the presence of multicollinearity. We then employ a comprehensive simulation methodology to evaluate OLS, the Equity estimator, and a particular form of the Ridge estimator which has received some attention in the statistical literature. We show that both Equity and Ridge perform significantly better than OLS on a variety of performance measures over most of the parameter space. The Equity estimator does much better than the Ridge estimator on the squared error criterion. On other criteria, the Equity estimator performs marginally better than Ridge. In particular, Equity does well when the degree of multicollinearity among the explanatory variables is high and/or the R2 of OLS for the sample is less than 0.7, conditions frequently encountered in marketing research. We discuss how the results of this study can be used by marketing researchers in choosing an appropriate estimator for their particular application.
Loss Leader Pricing and Rain Check Policy
Authors: Hess James D. , Gerstner Eitan
Published: October 2008

Loss leader pricing and rain check policies are common in retail markets, yet research on these topics is surprisingly scarce. In this paper, we study the effects of leader pricing and rain check policy on stores' profits and market outcomes. Suppose stores can accurately predict demand. Might they still run out of stock? We investigate whether such a result is plausible when stores can offer rain checks. The paper also helps resolve an issue that has recently attracted much attention: Should the FTC repeal its rule prohibiting stock outs of advertised sale items?
Comment—Managing Channel Profits: Comment
Authors: Moorthy K. Sridhar
Published: October 2008

In a recent paper in this journal, Jeuland and Shugan (Jeuland, A., S. Shugan. 1983. Managing channel profits. Marketing Sci. 2 (Summer) 239–272.) proposed a quantity discount schedule as a way of coordinating a channel. As they put it on p. 253 of their paper, “a quantity discount schedule which would fix the retailer's and hence the manufacturer's profits to some fixed linear function of total channel profits would lead the channel to maximize profits.” The purpose of this note is to show that a quantity discount schedule is not necessary for channel coordination.
A Model of Brand Choice and Purchase Quantity Price Sensitivities
Authors: Krishnamurthi Lakshman , Raj S. P.
Published: October 2008

Many consumer decisions involve a discrete choice and a continuous outcome. Examples of such decisions are whether to own a home or rent one and how much to spend, which brand of orange juice to buy and how many ounces to buy. In cases like these, the choice decision is typically modeled separately, say, using a logit model and the continuous outcomes modeled separately using regression analysis. However, the continuous outcomes may not be independent of the discrete choice and vice versa, and modeling the two decisions independently can lead to inefficient choice parameter estimates and biased and inconsistent regression parameter estimates. In this paper, we present a methodology from the limited-dependent variable literature to model the dependence between the choice and quantity decisions.

Our substantive interest is in the role of price in the choice and quantity decisions. When choosing among alternatives, we argue that consumers consider prices of all the competitive brands. In the quantity decision on the other hand, only the price of the chosen alternative is expected to impact how much of the alternative is purchased. The analysis of three brands, using disaggregate level panel data, strongly supports our hypothesis about the role of competitive prices in the choice and quantity decisions.
Choice Map: Inferring a Product-Market Map from Panel Data
Authors: Elrod Terry
Published: October 2008

This paper describes Choice Map, a model that infers a product-market map from panel data. Choice Map is a stochastic brand choice model, a random utility quantal choice model, and a multidimensional scaling procedure. Choice Map combines the parsimony of stochastic choice models, the rationale of random utility models, and the ability of multidimensional scaling procedures to simultaneously infer both brand positions and consumer preferences from preference (choice) data. Choice Map assumes that consumers have stationary purchase probabilities for the observational period, which makes the model best suited to frequently-bought mature product categories. Neither experimental nor survey data are required. Traditional mapping methods that scale such data may not yield the same structure for low-involvement products as will a procedure like Choice Map that scales behavioral data. Choice Map's descriptive and predictive validity exceeds that of an alternative stochastic brand choice model (the Dirichlet-multinomial) for a test data set.
Optimal Price and Advertising Policy for a Convenience Goods Retailer
Authors: Feichtinger Gustav , Luhmer Alfred , Sorger Gerhard
Published: October 2008

Convenience goods are bought without much consideration or effort on the part of the consumer. Buyers don't try to get the best bargain when purchasing individual convenience items. Instead, they adapt their store choice habits so that they can expect, on average, good value for money in the long run. Store choice is governed by aggregate information which is received on the price levels of stores. This is embodied in store price images. A store price image is defined in the subsequent paper as a perceived difference between the store's price level and a reference level that consumers expect of stores about which they have no particular information. Store price images are learnt adaptively over time. We propose a theoretical model of store price image adaptation and a two-stage sales response model. According to the latter, a store's price image and advertising determine the number of customers attracted per period. Sales per visit, however, depend only on the prices actually observed in the store. For this sales model, we have studied the optimal price and advertising policy making simple assumptions of cost. Our main interest is the interaction between optimal advertising and price image. It turns out that image improvement is achieved mainly through pricing; increased advertising follows only after the price image has been improved. Therefore, as long as the price image is poor relative to some optimal equilibrium level, a larger portion of the marketing budget should be allocated to lower prices rather than to advertising. In phases where the price image declines towards the equilibrium, however, heavier advertising is profitable.
Conjoint Analysis Reliability: Empirical Findings
Authors: Reibstein David , Bateson John E. G. , Boulding William
Published: October 2008

This paper looks at the comparative reliability of different methodological variants of the conjoint analysis procedure. It differs from previous studies in that it looks at three methods of data collection (Full Profile, Trade-off Matrices, and Paired Comparison) and two levels of a key attribute (price) across five different product categories. In addition it tests these manipulations using two different reliability assessment procedures. The results show that most manipulations have a significant effect on the reliability scores and many interaction terms are significant.
A Model for Customer Complaint Management
Authors: Fornell Claes , Wernerfelt Birger
Published: October 2008

A model of customer complaint management is developed in terms of defensive marketing strategy. Based on an explicit microfoundation, firms' incentives to manage complaints are analyzed. In the context of a monopoly and homogeneous oligopoly, we discuss the optimal levels of customer compensation and effort and characterize industries where complaint management is likely to be used. We then examine a differentiated oligopoly and find an explicit formula for the market share gains associated with complaint management. This is illustrated in an example with real data. We finally consider the trade-off between defensive strategy in the form of complaint management and various offensive marketing tools such as advertising and pricing.
Note—Consumer Store Choice and Choice Set Definition
Authors: Fotheringham A. Stewart
Published: October 2008

Consumer store choice results from a process whereby information on various alternatives is evaluated by the consumer prior to the selection of one of these alternatives. In the application of store choice models it is often assumed that the information-processing strategy underlying store choice is a simultaneous one in which all possible alternatives are evaluated by an individual. A competing assumption, increasingly recognized in aspatial choice, is that individuals initially evaluate clusters of alternatives and then only evaluate alternatives within a chosen cluster. The nested logit model is a well-known formulation for capturing this type of choice process. This paper adds to the above understanding of consumer spatial choice in the following ways:

(i) It describes an alternative to the nested logit model, known as a competing destinations model, which can be used to model hierarchical spatial choice processes. While this model has been described previously in the geography and planning literature, this paper contains a novel derivation of it from within the random utility maximization framework.

(ii) A general choice formulation is derived from which the logit, nested logit, and competing destinations models can be obtained. This allows the behavioral assumptions embedded in each model to be seen clearly and it allows a comparison of the nested logit and competing destinations formulations. The latter is shown to be preferable in most spatial choice situations. In particular, the latter can be used when restricted choice sets are fuzzy.

(iii) The errors that arise when spatial choice results from a hierarchical process and when a simultaneous choice structure is assumed are demonstrated and are related to the presence of consumer competition/agglomeration effects between stores which are thought to be important in store choice.
Optimal Pricing Strategies for New Products in Dynamic Oligopolies
Authors: Dockner Engelbert , Jørgensen Steffen
Published: October 2008

This paper deals with the determination of optimal pricing policies for firms in oligopolistic markets. The problem is studied as a differential game and optimal pricing policies are established as Nash open-loop controls. Cost learning effects are assumed such that unit costs are decreasing with cumulative output. Discounting of future profits is also taken into consideration.

Initially, the problem is addressed in a general framework, and we proceed to study some specific cases that are related to models presented in recent literature. Three basic classes of sales dynamics are analyzed: competition with price effects only, competition with price as well as adoption effects, and competition with adoption effects only. In some cases it turns out that results which hold for the monopoly case, carry over to the multi-firm case, in the sense that the qualitative structure of optimal pricing strategies is the same in the monopoly and the oligopoly cases. However, due to competitive interdependencies, differences certainly exist in the levels as well as the rates of change of optimal prices.
Commentary on “A Brand Switching Model with Implications for Marketing Strategies”
Authors: Greene Jerome D.
Published: October 2008

Commentary on Colombo, R. A., D. G. Morrison. 1989. A brand switching model with implications for marketing strategies. Marketing Sci. 8 1.
Reply
Authors: Colombo Richard A. , Morrison Donald G.
Published: October 2008

Authors' reply to commentaries Bordley (Bordley, R. F. 1989. Relaxing the loyalty condition in the Colombo/Morrison model. Marketing Sci. 8 100–103.) and Greene (Greene, J. D. 1989. Commentary on “A brand switching model with implications for marketing strategies.” Marketing Sci. 8 104–105.).
Durable Goods and Product Obsolescence
Authors: Levinthal Daniel A. , Purohit Devavrat
Published: October 2008

The issue of product obsolescence is addressed by examining the optimal sales strategy of a monopolist firm that may introduce an improved version of its current product. Consumers' expectations of a forthcoming product lowers the price that they are willing to pay for the current product because of its loss in value due to obsolescence. The new product is characterized by consumers' increased willingness to pay and by its competitive interaction with the old product. These characteristics affect the tradeoff that the firm makes between the cost of waiting for new product sales versus the cost of cannibalizing these sales. We analyze the effect of these characteristics of the new product on the firm's optimal sales strategy. We consider the various policy measures available to the firm, including limiting initial sales in order to lower cannibalization of the new product, buying back the earlier version of the product in order to generate greater demand for the new product, and announcements of future product introductions. We find that, for modest levels of product improvement, the firm's optimal policy is to phase out sales of the old product, while for large improvements a buy-back policy is more profitable. Lastly we find that the firm is better off if it informs consumers whether a new product is forthcoming.
Reply
Authors: Eastlack Joseph O. , Rao Ambar G.
Published: October 2008

Dodson (Dodson, J. 1989. Commentary on “Conducting advertising experiments in the real world: The Campbell Soup Company experience”. Marketing Sci. 8 72–73.) and McNiven (McNiven, M. A. 1989. Commentary on “Advertising experiments at the Campbell Soup Company”. Marketing Sci. 8 74–75.) have raised several interesting questions regarding our work. In this response, we would like to clarify some of the underlying issues.
The Relationship Between Market Characteristics and Promotional Price Elasticities
Authors: Bolton Ruth N.
Published: October 2008

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.
Evaluating Alternative Retail Repositioning Strategies
Authors: Corstjens Marcel , Doyle Peter
Published: October 2008

A methodology is provided for examining the impact on profitability of a significant change in the merchandise portfolio of a retailer. Such repositioning is essential to maintain competitiveness in a rapidly changing environment. At the same time, management is often reluctant to undertake such changes because they risk undermining the long-term core business. A model is provided which incorporates both short- and long-run estimates of the trade-off of new business generated against old business lost as a result of the change.
Note—Extending the Rotterdam Model to Test Hierarchical Market Structures
Authors: Vilcassim Naufel J.
Published: October 2008

Two issues that have implications across a firm's marketing activities are the estimation of the market response functions, and the determination of the structure of the market in which its products compete. In a recent paper, Clements and Selvanathan (Clements, K. W., E. A. Selvanathan. 1988. The Rotterdam demand model and its application to marketing. Marketing Sci. 7(Winter) 60–75.) describe how the Rotterdam Demand System can be used to study these two issues in a joint framework. In this note we extend their model to test hierarchical market structures using data at the brand/form level. We also incorporate idiosyncratic response coefficients that capture the effects of advertising and/or other nonprice marketing mix variables separate from the effects of a price change. These extensions provide additional insights into the nature and extent of competition among brands within a product class.
Note—Estimating Geographic Customer Densities Using Kernel Density Estimation
Authors: Donthu Naveen , Rust Roland T.
Published: October 2008

This paper shows how kernel density estimation may be used to estimate flexibly the geographic distribution of customers in a market. In addition it shows how a density-based product positioning methodology may be applied to site selection, using the estimated geographic customer density to help locate a new or (relocated) store or distribution center. This application provides a conceptual basis for more complicated site selection and spatial demand models which might involve several predictor variables.
Modeling Multinational Diffusion Patterns: An Efficient Methodology
Authors: Gatignon Hubert , Eliashberg Jehoshua , Robertson Thomas S.
Published: October 2008

The objective of this study is to develop an econometric model for the diffusion of innovations at the individual country level, but which also allows the parameters of the process to differ systematically across countries. The conceptualization rests on behavioral and spatial theories of diffusion and extends the domain to international markets. The cross-national model of innovation diffusion which is developed highlights substantive differences and similarities among international markets. It also provides estimates for the diffusion parameters, even for countries where sales data are not available, thereby yielding some insights into the nature of the expected diffusion pattern in these countries prior to market entry.
A Unified Approach to Identifying, Estimating and Testing Demand Structures with Aggregate Scanner Data
Authors: Allenby Greg M.
Published: October 2008

A one-to-one map between a specific demand structure and a restricted cross-elasticity matrix is developed and tested using a random utility model. The resulting demand structure can be used to evaluate a firm's ability to differentiate its products, and can help determine if demand is characterized by factors that are easy to change. Similar brands are assumed to share common attributes that are stochastically evaluated by the consumer, resulting in a random utility model with correlated errors. The map results in more precise cross-elasticity estimates and can be used to both identify and test possible structures.
Determinants of Continuity in Conventional Industrial Channel Dyads
Authors: Anderson Erin , Weitz Barton
Published: October 2008

Recently, increasing attention has been paid to the question of how to build stable, long-term relationships between manufacturers and members of conventional channels. This descriptive field study concerns a basic requirement for building long-term relationships, which is the expectation by a marketing intermediary that the relationship will last. Hypotheses about the continuity of relationships are developed from the literature on social exchange, bargaining, and negotiation. These hypotheses are framed as a simultaneous equation system, which is estimated via three-stage least squares on a sample of 690 relationships (dyads) involving manufacturers and their independent sales agents (manufacturers' representatives). Results substantially support the model, highlighting the importance of interpersonal relationships in insuring the continuity of the dyad.
The Economics of Product Variety: A Survey
Authors: Lancaster Kelvin
Published: October 2008

Demand for variety may arise from a taste for diversity in individual consumption and/or from diversity in tastes even when each consumer chooses a single variant. The full degree of variety potentially demanded will not, in general, be supplied because scale economies (even to a small degree) mean that the potential welfare or revenue gain from greater variety must be balanced against the lower unit production costs with fewer variants. The economics of product variety consists essentially in analysing the effect of this balance in different situations, and comparing the degree of product variety for different market structures with each other and with the optimum. The survey commences with the work on market structures with single product firms (generalized monopolistic competition), tracing modern developments in both the Chamberlinian and Hotelling traditions. The latter has been particularly fruitful, due to the expansion of the original locational ideas into virtual spaces in product characteristics. The emphasis in recent work on product variety has been on multiproduct firms in both monopolistic and oligopolistic structures, including strategic market preemption. Although most work has been in a full information context, there have been advances in product variety under imperfect information (either by consumers to properties of the firms' products or firms as to consumers' demands).
Designing Products and Services for Consumer Welfare: Theoretical and Empirical Issues
Authors: Gupta Sunil , Kohli Rajeev
Published: October 2008

In this paper we examine the theoretical and empirical issues that arise for a public-sector decision maker who wishes to use the target population's preferences as an input for designing new products and services. The marketing literature suggests using essentially the same approach as that for the private-sector problem, with one exception. Instead of maximizing profits, share or volume, the sum-of-benefits to society is maximized. However, the social welfare literature has suggested several other measures of welfare and shows that no single welfare function dominates all others. Therefore, to choose an appropriate welfare function to maximize the decision maker must first examine the theoretical and empirical similarities between the alternatives.

For six prominent welfare functions, we examine the theoretical differences in terms of the notion of fairness promoted and the kind of preference data required. Empirically, we examine the similarities in social rankings and first choices induced by these welfare functions under various preference configurations. We also examine their sensitivity to measurement error and preference normalization.
Modeling Inertia and Variety Seeking Tendencies in Brand Choice Behavior
Authors: Bawa Kapil
Published: October 2008

Theories of exploratory behavior suggest that inertia and variety-seeking tendencies may coexist within the individual, implying that the same individual may exhibit inertia and variety-seeking at different times depending on his/her choice history. Past research has not allowed for such within-consumer variability in these tendencies. The purpose of this study is to present a choice model that allows us to identify such “hybrid” behavior (i.e., a mixture of inertia and variety-seeking), and to distinguish hybrid behavior from simpler types of behavior such as pure inertia, pure variety-seeking and zero-order behavior. The model is estimated at the household level using panel data for three product classes, covering a total of 1069 households. The empirical analysis shows that more than half the households analyzed exhibited hybrid behavior rather than simpler types of behavior.
An Integrated Model-Based Approach for Sales Force Structuring
Authors: Rangaswamy Arvind , Sinha Prabhakant , Zoltners Andris
Published: October 2008

This paper analyzes the problem of designing the structure of multiproduct sales forces selling in an environment where purchase decisions are made on a straight rebuy or modified rebuy basis. It addresses two key issues pertaining to structure: How many sales forces should the firm have and which products should be assigned to each sales force?

First, the key determinants of sales force structure are identified and described. Next, a mathematical programming model is formulated that can aid firms in designing the structure of their multiproduct sales force. An application is then described in detail including sales response specification, parameter estimation, solution procedure, and model implementation. Insights from several of the numerous implementations of the model in the pharmaceutical industry are also summarized.
A Diffusion Model Incorporating Product Benefits, Price, Income and Information
Authors: Horsky Dan
Published: October 2008

We start by assuming that a major benefit of many new durable products such as dishwashers and microwave ovens is time savings. Others, such as VCRs, also enhance the value of our leisure time. Using a household production framework we demonstrate that a utility maximizing individual will have a reservation price for the product which is a function of the product benefits and his wage rate. By assuming that the wage rate has an extreme value distribution across the population, we are able to derive, for the aggregate process, an income-price dependent logistic adoption equation. We then allow for the possibility that certain eligible consumers may delay their purchase of the product because they are unaware that it exists, are suspicious of its quality, or expect its price to fall. Unawareness, uncertainty and hope for further price declines are assumed to decrease with the increase in the number of previous adopters. The resulting diffusion model has the property that the product life cycle phenomenon can be explained jointly or separately by the income-price process, and the awareness-uncertainty-expectations process. Using data on household income, on durable penetration within different income classes, and on first-purchase sales the aggregate diffusion model and its premises are tested and supported. It is found that both the income-price and awareness-uncertainty-expectations processes are at work. However, the dependence of the awareness-uncertainty-expectations delay process on the number of previous adopters (e.g., word-of-mouth type effect) exists only in certain product categories and is usually relatively weak. It is demonstrated that if the word-of-mouth type effects are weak, a price skimming strategy is optimal for a monopolist and also is likely to be implemented by oligopolists. The sales forecasting implications of the model also are pursued.
Subsolutions and the Supercore of Cooperative Games
Authors: Roth Alvin E.
Published: October 2008

A generalization of the von Neumann-Morgenstern solution, called a subsolution, is introduced. Subsolulions exist for all games (in a nontrival way for games with a nonempty core), and can be interpreted as “standards of behavior.” A unique, distinguished subsolution called the supercore is also identified; it is the intersection of all subsolutions.
Series Solutions to Static Team Control Problems
Authors: Rudge J. F.
Published: October 2008

The concept of infinite second guessing is known to play a role in the consideration of multi-person control problems. By considering the problem in its appropriate Hilbert space context we formalize this concept and show that it does in fact play a vital part in the structure of those solutions that are available. We give an explicit series solution to the constant coefficient quadratic cost team problem. This solution is valid for any distribution of noise, which is square integrable. The well-known linearity of optimal control in the Gaussian case is immediately apparent.

An important special case is given further consideration and other applications are indicated. Finally a theorem characterising the limit behaviour of the series in terms of the information common to all players is presented.
An Arbitration Model for Normal-Form Games
Authors: Rosenthal Robert W.
Published: October 2008

An arbitration model for cooperative two-person normal-form games is suggested in which each player's strength is measured by what he can obtain through committing himself to a course of action before his opponent does. This approach differs from earlier models in which threats were evaluated on the basis of their relative effects on the two players. Possibilities for extensions to the n-player case are included.
Regularity and Stability for Convex Multivalued Functions
Authors: Robinson Stephen M.
Published: October 2008

Multivalued functions with convex graphs are shown to exhibit certain desirable regularity properties when their ranges have internal points. These properties are applied to develop a perturbation theory for convex inequalities and to extend results on the continuity of convex functions.
Voting Equilibria in Multidimensional Choice Spaces
Authors: McKelvey Richard D. , Wendell Richard E.
Published: October 2008

This paper examines necessary and sufficient conditions for the existence of voting equilibria over a multidimensional issue space, following the lead of the seminal work of Davis and Hinich (Davis, O. A., M. J. Hinich. 1966. A mathematical model of policy formation in a democratic society. J. Bernard, ed. Mathematical Applications in Political Science II. Southern Methodist University Press, Dallas, 175–208.) and Plott (Plott, C. R. 1967. A notion of equilibrium and its possibility under majority rule. Amer. Econom. Rev. 57 787–806.). We assume a finite number of voters who vote among alternatives located in an m-dimensional vector space and that the voters vote according to their preferences defined over the space. Here, we generalize and strengthen many of the existing theorems to deal with global rather than local equilibria and plurality as opposed to majority voting rules.
Augmented Lagrangians and Applications of the Proximal Point Algorithm in Convex Programming
Authors: Rockafellar R. T.
Published: October 2008

The theory of the proximal point algorithm for maximal monotone operators is applied to three algorithms for solving convex programs, one of which has not previously been formulated. Rate-of-convergence results for the “method of multipliers,” of the strong sort already known, are derived in a generalized form relevant also to problems beyond the compass of the standard second-order conditions for oplimality. The new algorithm, the “proximal method of multipliers,” is shown to have much the same convergence properties, but with some potential advantages.
Estimates of the Duality Gap in Nonconvex Optimization
Authors: Aubin J. P. , Ekeland I.
Published: October 2008

We associate with every real-valued function a number which measures its lack of convexity. This number is used to estimate the duality gap in optimization problems where the criterion and/or the constraints are nonconvex. It is shown that when the number of variables is very great with respect to the number of constraints, this duality gap is small in relative value. Approximating in this way problems where the criterion and constraints are given as integrals, we show that the duality gap vanishes.
The Existence of Nondiagonal Axiomatic Values
Authors: Neyman Abraham , Tauman Yair
Published: October 2008

The question of whether or not the diagonal property is a consequence of the axioms defining the axiomatic value is answered in the negative by means of a counter-example: a space and an axiomatic value on it are introduced not possessing the diagonal property.
Computational Efficiency of Approximate Branch-and-Bound Algorithms
Authors: Ibaraki Toshihide
Published: October 2008

To improve the computational efficiency of a branch-and-bound algorithm at the sacrifice of obtaining an optimal solution, the lower bound test is sometimes strengthened beyond its limit, i.e., a partial problem Pi is terminated if g(Pi) ≥ z − ϵ(z) (instead of g(Pi) ≥ z), where g(Pi) is a lower bound of Pi, z is the current incumbent value and ϵ(z) (≥0) specifies the allowance within which the value of an obtained solution can deviate from the optimal.

This paper first shows that the efficiency (as measured by the number of decomposed partial problems) does not generally improve by introducing ϵ or by increasing ϵ, and then isolates subclasses of branch-and-bound algorithms for which a monotone increase in efficiency with respect to ϵ is guaranteed.
The Stationary Distribution and First Exit Probabilities of a Storage Process with General Release Rule
Authors: Harrison J. Michael , Resnick Sidney I.
Published: October 2008

Consider a storage process X = {X(t), t ≥ 0} with compound Poisson input and a (state-dependent) release rule r(·) which is arbitrary except for the requirement that state zero be reachable in finite time from any positive starting state. We show that there exists a stationary distribution for X if and only if there is a limiting distribution independent of the initial state, in which case the stationary distribution is unique and coincides with the limiting distribution. A necessary and sufficient condition for the existence of a stationary distribution, as well as a general solution for the distribution when it exists, is given. We also give a general formula for U(x), the probability that level b is exceeded before level a is reached, starting from state x ∈ (a, b]. Both the stationary distribution and U(x) are expressed in terms of a certain positive kernel.
Optimal Plans for Dynamic Programming Problems
Authors: Himmelberg C. J. , Parthasarathy T. , VanVleck F. S.
Published: October 2008

It is proved that there exist stationary optimal plans for discounted dynamic programming problems, and that there exist semi-Markov ϵ-optimal plans for positive dynamic programming problems. The actions are required to be taken in a variable action set F(s), and the reward function r(s, a) is a Borel measurable function of (s, a) and an u.s.c. function of a. Our results are related to recent work by Furukawa, Maitra, and Schal. The key tool is a generalization of a selection theorem of Dubins and Savage.
Addendum: A Finite Algorithm for Solving Nonlinear Allocation Problems
Authors: Einbu John M.
Published: October 2008

This note communicates two improvements to a finite allocation algorithm previously reported. The algorithm yields exact solutions to multi-resource allocation problems which have concave return functions. The first improvement permits one of the conditions on the return functions to be relaxed and the second improvement speeds up one of the steps of the algorithm.
Segregating the Input to a Series of Buffers
Authors: Kelly F. P.
Published: October 2008

Messages are to be transmitted through a series of n nodes linked by communication channels. The lengths of messages are independent identically distributed random variables, and the time taken to transmit a message through a channel is equal to the message's length. Each node has a finite buffer, and when the number of messages at a node reaches the buffer size transmission from the preceding node is interrupted. This paper is concerned with the extent to which the throughput of such a system can be improved by segregating long messages. It is shown, for example, that by using two series in parallel, one dealing with long messages and the other dealing with the rest, the decay of throughput with series length can be improved from (log n)−1 to (log log n)−1 in the case where message lengths are exponentially distributed.
A Condition Number for Differentiable Convex Inequalities
Authors: Mangasarian O. L.
Published: October 2008

For a system of differentiable convex inequalities, a new bound is given for the absolute error in an infeasible point in terms of the absolute residual. By using this bound a condition number is defined for the system of inequalities which gives a bound for the relative error in an infeasible point in terms of the relative residual.
A Linearization Algorithm for Nonsmooth Minimization
Authors: Kiwiel Krzysztof Czesław
Published: October 2008

We present a readily implementable algorithm for finding stationary points for locally Lipschitzian functions that are not necessarily convex or differentiable. The algorithm is an extension to the nonconvex case of the aggregate subgradient method. The user can impose an upper bound on storage and work per iteration, whereas no such uniform bound exists for the algorithms due to Lemarechal and Mifflin on which our method is based. The algorithm is globally convergent in the sense that all its accumulation points are stationary. Moreover, the algorithm converges when the objective function happens to be convex. This seems to be the first such result for descent methods for nonsmooth minimization.
Discounted-Value Representations of Temporal Preferences
Authors: Weibull Jörgen W.
Published: October 2008

This paper examines the proposition that temporal preferences may be represented in terms of discount functions. An analytical framework is developed within which preferences are defined over a set of programs or prospects over time. Necessary and sufficient conditions for generalized discounting, discounting as well as exponential discounting are established for a class of program sets over discrete and continuous time.