CAUSES OF RETAIL PRICE FIXITY: AN EMPIRICAL ANALYSIS

Existing empirical studies do not provide a unifying explanation for retail price fixity. However, economic hysteresis, or the persistence of an economic phenomenon after its initial cause has disappeared, offers a general explanation. Estimates of an empirical model of retail-price hysteresis using store-level scanner data support our hypothesis.Demand and Price Analysis,

Dynamic informative advertising of new experience goods:

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

An Integrative Framework of Cooperative Advertising: Should Manufacturers Continuously Support Retailer Advertising?.

Producción CientíficaA two-period game is developed in a bilateral monopoly where, besides pricing decisions, the retailer and manufacturer can set their advertising and cooperative advertising support rates for each period. It is demonstrated that, in addition to the established continuous cooperative advertising programs, in which the retailer advertises and the manufacturer supports retailer advertising in each period, two other advertising schedules are possible. First, the retailer advertises in each period, while the manufacturer only supports the second-period advertising. Second, whether or not the manufacturer provides a cooperative advertising program in the first period, the retailer only advertises in the second period and receives advertising support. The conditions under which each of these advertising arrangements is implemented are identified. In a continuous cooperative advertising schedule, the manufacturer may change his advertising support over time depending on the nature of the long-term effects of retailer advertising. The implications of these findings are discussed.The fi rst author's research is partially supported by MEC under projects ECO2011-24352 and ECO2014-52343-P, co- nanced by FEDER funds and the COST Action IS1104 \The EU in the new economic complex geography: models, tools and policy evaluation"

Optimal Filtering of an Advertising Production System with Deteriorating Items

In this paper, we consider an integrated stochastic advertising-production system in the case of a duopoly. Two firms spend certain amounts to advertise some product. The expenses processes evolve according to the jumps of two homogeneous, finite-state Markov chains. We assume that the items in stock may be subject to deterioration and the deterioration parameter is assumed to be random

Dynamic Advertising-based Goodwill Incorporating Fuzzy Environment in Segment-Specific Market

A new product's introduction to the market is greatly influenced by effective and enough advertising. In this paper, we have considered a problem in which the firm partitions the market into various segments to reduce costs associated with advertising and targets to maximize the total profit. By integrating single channel and differentiated advertising to segmented market, we extend Nerlove-goodwill Arrow's dynamic model in which advertising variables are control variables. It is assumed that the whole available budget is imprecise and fuzzy in nature in order to create a realistic model. Using necessity and possibility constraints, the optimal control model with fuzzy parameters is transformed into crisp form, and the Pontryagin Maximum principle is then used to solve the problem. Numerical examples are provided to support the theoretical analysis

The Nature of Services and the Implications for Competition Policy

Though 'services' is a very broad concept and any generalisations should be made with caution it is widely acknowledged that services differ from goods in many respects. Analyses of key elements of market structure conduct and performance and the interface between these elements show us that competition in services markets is equally distinctive. We find that traditional competition policy instruments generally do not reflect competition and performance in most services markets. Alternative policy measures should recognise the importance and disciplining power of non-price competition and the fact that quality and reputation are the main variables in services competition

The Nature of Services and the Implications for Competition Policy

Though 'services' is a very broad concept and any generalisations should be made with caution it is widely acknowledged that services differ from goods in many respects. Analyses of key elements of market structure conduct and performance and the interface between these elements show us that competition in services markets is equally distinctive. We find that traditional competition policy instruments generally do not reflect competition and performance in most services markets. Alternative policy measures should recognise the importance and disciplining power of non-price competition and the fact that quality and reputation are the main variables in services competition

Entry and Competition in the Pharmaceutical Market following Patent Expiry

This dissertation encompasses three essays on entry and competition in the German generic drug market. The first paper examines the market entry decisions of generic companies and finds that original drug producrs do not create barriers to entry by launching a generic version of the brand drug prior to patent expiry. The second paper examines generic market share dynamics and patients‘ switching behaviors among generic drugs. The analysis shows that generic market shares are little influenced by prices and highly persistent over time, conferring a substantial advantage to first generic entrants. Price differentials likewise have a negligible impact on the likelihood that patients switch to a generic drug offered by a different manufacturer. The third paper investigates generic price differentials and provides evidence of economies of scope and reputation effects

Consumer Sales Law from an Economic Perspective

Introduction: In the European internal market consumers have a wide choice of products that become increasingly available through cross-border shopping. Sometimes sellers frustrate consumers‟ contractual expectations by delivering goods that are not of satisfactory quality. To guarantee a minimum level of consumer protection, EC Directive 1999/44 requires that goods must be in conformity with the contract of sale.1 This rule applies regardless of whether the seller behaved negligently. In cases of non conformity consumers have a choice of different remedies for breach of contract by the seller, such as repair or replacement or price reduction. The Directive has been presented as a significant step towards creating an internal consumer market, which would be impeded by fragmented and heterogeneous consumer protection rules. It may be followed in the future by further harmonization initiatives in the field of consumer sales law. From an economic perspective, two sets of questions arise. First, it may be asked whether legal intervention is necessary to guarantee quality in markets for consumer goods. The standard economic answer to this question is that legal rules may cure market failures, in particular problems of asymmetric information. However, any legal intervention must be justified by a benefit-cost analysis to enhance economic efficiency and avoid counterproductive effects. Consumer protection should be increased only up to the point where its marginal cost equals its marginal benefit. Moreover, market failures should not be replaced by government failures, which lead to outcomes that are worse than those of imperfect markets. Second, Law and Economics scholars have critically analyzed the question relating to the best level of government for designing regulatory responses to market failures. Should rules of consumer protection be enacted at the European level or should regulatory action be taken by the Member States? The economic analysis of federalism and regulatory competition provides several useful insights that are also relevant for discussing the desirability of harmonization of consumer sales law to further market integration