10,581 research outputs found

    Asymmetric Consumer Learning and Inventory Competition

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    We develop a model of consumer learning and choice behavior in response to uncertain service at the marketplace. Learning could be asymmetric, i.e., consumers may associate different weights with positive and negative experiences. Under this consumer model, we characterize the steady-state distribution of demand for retailers given that each retailer holds constant in-stock service level. We then consider a non-cooperative game at the steady-state between two retailers competing on the basis of their service levels. Our model yields a unique pure strategy Nash equilibrium. We show that asymmetry in consumer learning has a significant impact on the optimal service levels, market shares and profits of the retailers. When retailers have different costs, it also determines the extent of competitive advantage enjoyed by the lower cost retailer.Operations Management Working Papers Serie

    Inefficiencies in Digital Advertising Markets

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    Digital advertising markets are growing and attracting increased scrutiny. This article explores four market inefficiencies that remain poorly understood: ad effect measurement, frictions between and within advertising channel members, ad blocking, and ad fraud. Although these topics are not unique to digital advertising, each manifests in unique ways in markets for digital ads. The authors identify relevant findings in the academic literature, recent developments in practice, and promising topics for future research

    Oil price volatility and the asymmetric response of gasoline prices to oil price increases and decreases

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    This paper analyzes the effect of volatility in oil prices on the degree of asymmetry in the response of gasoline prices to oil price increases and decreases. Several time series measures of the asymmetry between the responses of gasoline prices to oil price increases and decreases and several measures of the oil price volatility are constructed. In all models, the degree of asymmetry in gasoline prices declines with an increase in oil price volatility. The results support the oligopolistic coordination theory as a likely explanation of the observed asymmetry and are not consistent with the standard search theory and the search theory with Bayesian updating.gasoline price response, asymmetric response, search theory

    Leadership in Multi-sided Markets

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    I analyze the role of leadership in multi-sided markets as online advertising. Search and display advertising are better characterized by (respectively) quantity and price competition. A platform that reached dominance in search may have an incentive to limit services to consumers to be aggressive with the advertisers, to exploit its scale in search to build barriers to entry, or to adopt click-weighted auctions to manipulate the pricing of sponsored links. On the other side, a dominant platform in display advertising may increase the rewards of content providers to increase prices on advertisers, or may adopt exclusive clauses to predate on other platforms.Multisided markets, Leadership, Dominance

    The Brokerage of Asymmetric Information

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    In this paper we oversee the logic of information sets, firstly handling information and markets in perfect environments and, secondly, dealing with information and markets in imperfect environments, in the context of bounded rationality. Further on, asymmetric information is addressed together with the role of opportunistic behaviour through hidden action, hidden information, the free-rider problem and signaling, expanding on financial accounting and asymmetric information. At last, asymmetric markets are expanded on, reviewing the buyers’ and sellers’ markets so as to handle the performance of intermediaries who stand ready to provide with immediacy and liquidity to buyers and sellers of financial assets. There are two contributions that this paper brings forward: firstly, an intuitive treatment of information sets in the context of mathematical Set Theory so as to make tractable some issues still neglected. Secondly, we claim and develop that a careful assessment of information sets makes headway towards an approach that regards market makers and other intermediaries as brokers of asymmetric information.

    Asymmetric Price Adjustments Under Ever-Increasing Costs. Evidence from the Retail Gasoline Market in Colombia

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    There is abundant empirical evidence showing that asymmetric price adjustments exist in a wide variety of markets. Prices tend to grow faster when costs rise relative to the rate at which prices drop when costs fall. The objective of this paper is to empirically test whether asymmetric price adjustments exist in a scenario where costs are increasing every period.The Colombian retail gasoline market offers an excellent case study due to a specific regulation, something discussed further in this paper. Our results suggest that when costs rise above the reference price -a government suggested retail price- retail prices tend to rise less relative to when costs grow below the reference price. Thus, asymmetry does exist.Asymmetric price adjustments, Gasoline retail markets, Search, Reference Prices.

    Commodity Price Pass-Through in Differentiated Retail Food Markets

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    Prices for nearly all basic commodity rose at unprecedented rates throughout early 2008, only to fall nearly as fast as financial markets and global economies began to collapse. Rising food prices in 2008 led to concerns that commodity price spikes would lead to more general food inflation, but by early 2009 interest focused more on the seeming inability of food prices to fall back down with commodity prices. This study provides an empirical investigation into the pass-through of commodity prices to retail prices for two different types of food products: potatoes and fluid milk. The results show that pass-through depends on the nature of the food in question, but is generally consistent with theoretical models of pricing by sellers of multiple, differentiated products. In particular, pass-through rates tend to be lower for processed (differentiated) products during periods of falling input prices than when input prices are rising. For less processed products, pass-through tends to be higher during regimes of both rising and falling input prices. Our results show that pass-through depends on the degree of pricing power possessed by all channel members and, more generally, suggest a nuanced approach to understanding retail food price inflation.commodity prices, conduct, industrial organization, inflation, market power, nested logit, pass-through, random parameters model, Consumer/Household Economics, Demand and Price Analysis, Industrial Organization, C35, D12, D43, L13, L41, Q13,
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