The role of information provision as a policy instrument to supplement environmental taxes: Empowering consumers to choose optimally

The present paper examines, within a dynamic framework, the use of information provision as a policy instrument to supplement environmental taxation. We assume that at least a fraction of consumers do not posses the required information to make the optimal choices, and that their behavior at each time period depends on the accumulated stock of information. We show that, as the accumulated stock of information provision increases, both the optimal level of information provided at each period of time and the optimal tax rate decline over time. Our results provide strong evidence in support of information campaigns as a policy instrument to supplement traditional environmental policies. Information provision can sift the demand towards environmentally friendly products over time and thus, reduce the required level of the tax rate.Information provision, environmental taxes, policy instruments

The Role of Information Provision as a Policy Instrument to Supplement Environmental Taxes: Empowering Consumers to Choose Optimally

The present paper examines, within a dynamic framework, the use of information provision as a policy instrument to supplement environmental taxation. We assume that at least a fraction of consumers do not posses the required information to make the optimal choices, and that their behavior at each time period depends on the accumulated stock of information. We show that, as the accumulated stock of information provision increases, both the optimal level of information provided at each period of time and the optimal tax rate decline over time. Our results provide strong evidence in support of information campaigns as a policy instrument to supplement traditional environmental policies. Information provision can shift the demand towards environmentally friendly products over time and thus, reduce the required level of the tax rate.Information Provision, Environmental Taxation

The role of information provision as a policy instrument to supplement environmental taxes: Empowering consumers to choose optimally

This paper examines, within a dynamic framework, the role of information provision as a policy instrument to supplement environmental taxation. Several products are responsible for long term health problems as well as environmental damages. Many consumers do not possess the required information to optimally substitute away from these products. However, as the stock of information regarding the negative effects of these products builds up, an increasing fraction of consumers behaves optimally. The government uses two policy instruments, environmental taxation and information provision. We show that as the accumulated stock of information increases, the optimal tax rate declines over time. Information provision can shift market demand towards environmentally friendly goods over time, and thus reduce the required level of the tax rate. Our results provide strong evidence in support of information campaigns as a policy instrument to supplement traditional environmental policies.

Dynamic informative advertising of new experience goods:

Advertising, experience goods, Learning, monopoly, private information,

Internet media planning : an optimization model

Of the various media vehicles available for advertising, the internet is the latest and the most rapidly growing, emerging as the ideal medium to promote products and services in the global market. In this article, the authors propose an internet media planning model whose main objective is to help advertisers determine the return they obtain from spending on internet advertising. Using available data such as internet page view and advertising performance data, the model contributes to attempts not only to optimize the internet advertising schedule but also to fix the right price for internet advertisements on the basis of the characteristics of the exposure distribution of sites. The authors test the model with data provided by KoreanClick, a Korean market research company that specializes in internet audience measurement. The optimal durations for the subject sites provide some useful insights. The findings contrast with current web media planning practices, and the authors demonstrate the potential savings that could be achieved if their approach were applied.media planning; optimization; advertising repeat exposure; probability distribution; internet

Optimal Media Allocation of Generic Fluid Milk Advertising Expenditures: The Case of New York State

A fixed-effects panel data demand model for five New York State markets is estimated to determine the differential impacts of generic fluid milk advertising by media type. Empirical results indicate that among the four media outlets, television advertising has the largest impact on per capita demand, followed by radio, outdoor, and print. Based on the estimated media-specific elasticities, media reallocation of advertising expenditures suggests that milk sales could increase significantly. The results indicate that cooperative media plan strategies developed between the New York regional advertising program and the national advertising programs would achieve the greatest benefits.generic advertising, milk, optimal media allocation, panel data, Marketing,

Vertical competition between manufacturers and retailers and upstream incentives to innovate and differentiate

Vertical competition, namely competition between retailers' store brands (or private labels) and manufacturers' brands has become a crucial factor of change of the competitive environment in several industries, particularly in the grocery and food industries. Despite the growing literature on the determinants of the phenomenon, one topic area regarding the impact of vertical competition on the upstream incentives to adopt non-price strategies such as product innovation as well as horizontal and vertical product differentiation has so far received little attention. An idea often put forward is that the increasing bargaining power of retailers and higher vertical competitive pressures can have negative effects on such incentives by lowering manufacturers' profits. On the other hand, there is a significant empirical evidence supporting the view that non-price strategies of product innovation and differentiation continue to play a key role and remain a crucial source of competitive advantages for several manufacturers. In this paper, we present a simple conceptual framework which allows us to focus on two hypotheses which interacting explain why the disincentive effects are not so obvious. The first hypothesis regards the existence of an inverse relationship between the strength of a given brand and the retail margin as suggested by Robert Steiner. Through a two-stage model in which manufacturers do not sell directly to final consumers and the retail industry is not perfectly competitive, Steiner argued persuasively that in such models leading brands in a product category yield lower retail margins than less strong brands. Retailers are forced to stock strong brands and therefore have relatively less bargaining power in negotiating wholesale prices. In addition, price competition among retailers is more intense on strong brands since consumers select these brands to form their perceptions of stores' price competitiveness and are ready to shift to lower price stores if retail price of these brands is not perceived as competitive. Thus, intensive intrabrand competitive pressures discipline retailers pricing policy on stronger manufacturer brands much more than on weaker brands. A key prediction of Steiner's two-stage model is that, since manufacturers' non-price strategies have a margin depressing impact which is additional to their direct demand - creating effect, manufacturers face greater incentives to invest in advertising and R&D. The second central hypothesis in our framework is that in a world of asymmetric brands and intense vertical competition there is a further mechanism at work due to retailers' delisting decisions. Given that retailers have to make room for their store brands at the point of sale, they have to readjust their assortments delisting some manufacturer brands. Retailers would like delisting strong brands given that the retailer's margin on these brands is lower. The problem is that strong brands can contrast vertical pressures better than weaker brands and cannot be delisted. In making shelf - space decisions, rational retailers will recognise that they can delist only the brands whose brand loyalty is lower than their store loyalty. On the contrary, retailers cannot delist brands for which brand loyalty is greater than store loyalty. This implies that manufacturer brands operate in a two- region environment. We call these two regions, respectively, the 'delisting' and 'no-delisting' region and show that the demarcation point between them is given by the level of retailer's store loyalty. By combining the Steiner's hypothesis with the mechanism of delisting, we argue that in a competitive environment characterized by vertical competition is at work a threshold effect which increases optimal 2 R&D and advertising expenditures. The intuition is that it is vital for manufacturers willing to remain sellers of branded products to keep brand loyalty of their brands at a level higher than retailer's store loyalty. And the only way to pursue this goal and avoid to be involved into the risk of being delisted is to boost brands. We also show that vertical competitive pressures are particularly strong on second- tier brands. A brief review of some recent patterns and stylised facts in the food industries and grocery channels consistent with these predictions conclude the paper.vertical competition, store brands, delisting, optimal advertising, Industrial Organization,

Price Dispersion with Directed Search.

We study a market where identical capacity-constrained sellers compete to attract identical buyers, via price advertisements. Once buyers reach a store, prices might be renegotiable in a manner that is responsive to excess demand. We focus strongly symmetric equilibria, proving their existence and providing explicit solutions for the distributions of advertised and sale prices as functions of market characteristics. Since variations in the posted price can affect the store’s attractiveness and the incidence of haggling, the model endogenizes the ‘pricing convention’ prevailing in the market and generates several empirically testable predictions on market behavior.Directed Search ; Endogenous Trading Mechanisms ; Market Frictions ; Price Dispersion

Political Economy Reasons for Government Inertia: The Role of Interest Groups in the Case of Access to Medicines

The reluctant reaction of western governments to the AIDS crisis in developing countries is only one example for policy areas where we observe a lack of political action despite a public interest in policy change. The reasons for that lie in the two-stage structure of the political decision-making process: Interest groups influence both the policy choice and the subsequent decision on the level of policy implementation. The lobbies' interest in reform and the issue-specific chance for compromise determine the policy choice. The interest groups' failure to agree on political strategies creates reduced incentives to support policy implementation