{"title":"Evaluating horizontal mergers in the presence of price promotions","authors":"Maxim Sinitsyn","doi":"10.1007/s11129-019-09213-7","DOIUrl":"https://doi.org/10.1007/s11129-019-09213-7","url":null,"abstract":"In this paper, I investigate the impact of a horizontal merger between firms that use price promotions. I find that after the merger, the merged firms increase their prices, but coordinate the promotions by never discounting their products simultaneously. The non-merged firm responds with a more aggressive pricing strategy, offering deeper and more frequent discounts. The effects of a merger on the firms’ profits and the consumer surplus are very small relative to the case with no promotions. These conclusions are not affected by the size of the change in market concentration or by the degree of substitutability between the merging products. Thus, the use of price promotions by the merging firms can be viewed as a mitigating factor by the antitrust authorities.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"18 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-06-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138524609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Comments on “identification and semiparametric estimation of a finite horizon dynamic discrete choice model with a terminating action”","authors":"Øystein Daljord, Denis Nekipelov, Minjung Park","doi":"10.1007/s11129-019-09210-w","DOIUrl":"https://doi.org/10.1007/s11129-019-09210-w","url":null,"abstract":"Bajari et al. (<i>Quantitative Marketing and Economics</i>, <i>14</i>(4), 271–323, 2016) showed conditions under which the discount factor is identified in a finite horizon optimal stopping problem. We show that these conditions can be cast as a special case of a class of exclusion restrictions which are relevant for a broader scope of applications, and extend the identification result to both finite horizon and infinite horizon optimal stopping problems under more general exclusion restrictions. We also show how a similar approach gives identification of general discount functions in finite horizon optimal stopping problems. The identification results directly suggest estimators of the discount functions that are easy to compute.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"19 8","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138524620","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Can your advertising really buy earned impressions? The effect of brand advertising on word of mouth","authors":"Mitchell J. Lovett, Renana Peres, Linli Xu","doi":"10.1007/s11129-019-09211-9","DOIUrl":"https://doi.org/10.1007/s11129-019-09211-9","url":null,"abstract":"Paid media expenditures could potentially increase earned media exposures such as social media posts and other word-of-mouth (WOM). However, academic research on the effect of advertising on WOM is scarce and shows mixed results. We examine the relationship between monthly Internet and TV advertising expenditures and WOM for 538 U.S. national brands across 16 categories over 6.5 years. We find that the average implied advertising elasticity on total WOM is small: 0.019 for TV, and 0.014 for Internet. On the online WOM (measured volume of brand chatter on blogs, user-forums, and Twitter), we find average monthly effects of 0.008 for TV and 0.01 for Internet advertising. Even the categories that have the strongest implied elasticities are only as large as 0.05. Despite this small average effect, we do find that advertising in certain events may produce more desirable amounts of WOM. Specifically, using a synthetic control approach, we find that being a Super Bowl advertiser causes a moderate increase in total WOM that lasts 1 month. The effect on online WOM is larger, but lasts for only 3 days. We discuss the implications of these findings for managing advertising and WOM.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"150 6","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-04-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138524653","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Zvi Gilula, Robert E. McCulloch, Yaacov Ritov, Oleg Urminsky
{"title":"A study into mechanisms of attitudinal scale conversion: A randomized stochastic ordering approach","authors":"Zvi Gilula, Robert E. McCulloch, Yaacov Ritov, Oleg Urminsky","doi":"10.1007/s11129-019-09209-3","DOIUrl":"https://doi.org/10.1007/s11129-019-09209-3","url":null,"abstract":"This paper considers the methodological challenge of how to convert categorical attitudinal scores (like satisfaction) measured on one scale to a categorical attitudinal score measured on another scale with a different range. This is becoming a growing issue in marketing consulting and the common available solutions seem too few and too superficial. A new methodology for scale conversion is proposed, and tested in a comprehensive study. This methodology is shown to be both relevant and optimal in fundamental aspects. The new methodology is based on a novel algorithm named <i>minimum conditional entropy</i>, that uses the marginal distributions of the responses on each of the two scales to produce a unique joint bivariate distribution. In this joint distribution, the conditional distributions follow a stochastic order that is monotone in the categories and has the relevant optimal property of maximizing the correlation between the two underlying marginal scales. We show how such a joint distribution can be used to build a mechanism for scale conversion. We use both a frequentist and a Bayesian approach to derive mixture models for conversion mechanisms, and discuss some inferential aspects associated with the underlying models. These models can incorporate background variables of the respondents. A unique observational experiment is conducted that empirically validates the proposed modeling approach. Strong evidence of validation is obtained.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"25 5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138524638","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Is pharmaceutical detailing informative? Evidence from contraindicated drug prescriptions","authors":"Guofang Huang, Matthew Shum, Wei Tan","doi":"10.1007/s11129-018-9206-4","DOIUrl":"https://doi.org/10.1007/s11129-018-9206-4","url":null,"abstract":"Crestor, an important but controversial cholesterol-lowering drug, is contraindicated for use by senior and Asian patients. In this paper, we exploit this fact along with unique physician-level prescription and detailing data for statin drugs to examine the hypothesis that detailing is informative. Our tests are based on a simple model in which detailing impacts physicians’ expected match utility of Crestor for different types of patients. We find strong evidence for the informative-detailing hypothesis: relative to the other patients, detailing significantly reduces physicians’ likelihood of prescribing Crestor to contraindicated patients. Our results are robust to detailing being correlated with physician-specific unobserved factors and/or differential trends in individual physicians’ attitudes toward Crestor.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"15 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140884840","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Advertising and brand attitudes: Evidence from 575 brands over five years","authors":"Rex Yuxing Du, Mingyu Joo, Kenneth C. Wilbur","doi":"10.1007/s11129-018-9204-6","DOIUrl":"https://doi.org/10.1007/s11129-018-9204-6","url":null,"abstract":"Little is known about how different types of advertising affect brand attitudes. We investigate the relationships between three brand attitude variables (perceived quality, perceived value and recent satisfaction) and three types of advertising (national traditional, local traditional and digital). The data represent ten million brand attitude surveys and $264 billion spent on ads by 575 regular advertisers over a five-year period, approximately 37% of all ad spend measured between 2008 and 2012. Inclusion of brand/quarter fixed effects and industry/week fixed effects brings parameter estimates closer to expectations without major reductions in estimation precision. The findings indicate that (<i>i</i>) national traditional ads increase perceived quality, perceived value, and recent satisfaction; (<i>ii</i>) local traditional ads increase perceived quality and perceived value; (<i>iii</i>) digital ads increase perceived value; and (<i>iv</i>) competitor ad effects are generally negative.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140884517","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Dynamic stochastic games with random moves","authors":"Ulrich Doraszelski, Kenneth L. Judd","doi":"10.1007/s11129-018-9200-x","DOIUrl":"https://doi.org/10.1007/s11129-018-9200-x","url":null,"abstract":"We reformulate the quality ladder model of Pakes and McGuire, <i>Rand Journal of Economics</i>, <i>25</i>(4), 555–589 (1994) as a dynamic stochastic game with random moves in which each period one firm is picked at random to make an investment decision. Contrasting this model to the standard version with simultaneous moves illustrates the computational advantages of random moves. In particular, the quality ladder model with random moves avoids the curse of dimensionality in computing firms’ expectations over all possible future states and is therefore orders of magnitude faster to solve than its counterpart with simultaneous moves when there are more than just a few firms. Perhaps unexpectedly, the equilibria of the quality ladder model with random moves are practically indistinguishable from those of the model with simultaneous moves.","PeriodicalId":501397,"journal":{"name":"Quantitative Marketing and Economics","volume":"114 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140884713","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}