PAYING FOR SHELF SPACE: AN INVESTIGATION OF MERCHANDISING ALLOWANCES IN THE GROCERY INDUSTRY

This research examines the behavior of manufacturers and retailers in the presence of merchandising allowances. Merchandising allowances are fees manufacturers pay retailers to encourage them to allocate certain in-store promotional activities to the manufacturers' brand. According to estimates, retailers collect billions of dollars in these allowance payments annually. Using a three-stage game, I formulate a vertical structural model that endogenously models manufacturer, retailer, and consumer behavior. Manufacturers compete with each other, using merchandising allowance payments, in order to obtain premium shelf space at retail outlets. Retailers, given allowance offers, choose display configurations and then set retail prices. Consumers observe the display and retail prices and determine whether to purchase one or no units of the good. I estimate the model with a method of moments technique using IRI scanner data from the ketchup industry. In addition to estimating consumer tastes parameters, the model yields predictions of the underlying wholesale prices and the merchandising allowances each manufacturer offers. I use the parameter estimates to conduct a counterfactual simulation of how agents might respond when the use of merchandising allowances is no longer permissible. I find that while merchandising allowances increase retail profits, total welfare is lower due to the allowances.Industrial Organization, Marketing,

The diffusion dynamics of choice: From durable goods markets to fashion first names

Goods, styles, ideologies are adopted by society through various mechanisms. In particular, adoption driven by innovation is extensively studied by marketing economics. Mathematical models are currently used to forecast the sales of innovative goods. Inspired by the theory of diffusion processes developed for marketing economics, we propose, for the first time, a predictive framework for the mechanism of fashion, which we apply to first names. Analyses of French, Dutch and US national databases validate our modelling approach for thousands of first names, covering, on average, more than 50% of the yearly incidence in each database. In these cases, it is thus possible to forecast how popular the first names will become and when they will run out of fashion. Furthermore, we uncover a clear distinction between popularity and fashion: less popular names, typically not included in studies of fashion, may be driven by fashion, as well.Comment: 11 pages, 1 table, 2 figures, 4 pages of supporting informatio

GPs' preferences: What price fee-for-service?

In mixed health care systems a crucial condition for the success of Managed Care (MC) plans is to win over a su±cient number of general practitioners (GPs) acting as gatekeepers. This contribution reports on GPs' willingness-to-accept (WTA) or compensation asked, respectively, for changing from conventional fee-for-service to MC practice. Some 175 Swiss GPs participated in discrete choice experiments which permit to put a money value on their status quo bias. Regardless of whether effects coding or dummy coding is used to measure status quo bias, Swiss GPs require at least 16 percent of their current average income to give up fee-for-service in favor of MC practice.general practitioners, willingness-to-pay, preferences, market experiments, managed care, effects coding, status quo bias

Sustainable consumption: towards action and impact. : International scientific conference November 6th-8th 2011, Hamburg - European Green Capital 2011, Germany: abstract volume

This volume contains the abstracts of all oral and poster presentations of the international scientific conference „Sustainable Consumption – Towards Action and Impact“ held in Hamburg (Germany) on November 6th-8th 2011. This unique conference aims to promote a comprehensive academic discourse on issues concerning sustainable consumption and brings together scholars from a wide range of academic disciplines. In modern societies, private consumption is a multifaceted and ambivalent phenomenon: it is a ubiquitous social practice and an economic driving force, yet at the same time, its consequences are in conflict with important social and environmental sustainability goals. Finding paths towards “sustainable consumption” has therefore become a major political issue. In order to properly understand the challenge of “sustainable consumption”, identify unsustainable patterns of consumption and bring forward the necessary innovations, a collaborative effort of researchers from different disciplines is needed

Combining Revealed and Stated Preference Data to Estimate the Nonmarket Value of Ecological Services: An Assessment of the State of the Science

This paper reviews the marketing, transportation, and environmental economics literature on the joint estimation of revealed and stated preference data. The revealed preference and stated preference approaches are first described with a focus on the strengths and weaknesses of each. Recognizing these strengths and weaknesses, the potential gains from combining data are described. A classification system for combined data that emphasizes the type of data combination and the econometric models used is proposed. A methodological review of the literature is pursued based on this classification system. Examples from the environmental economics literature are highlighted. A discussion of the advantages and disadvantages of each type of jointly estimated model is then presented. Suggestions for future research, in particular opportunities for application of these models to environmental quality valuation, are presented.Nonmarket Valuation, Revealed Preference, Stated Preference

Preference Heterogeneity and Habit Persistence: The Case of Breakfast Cereal Consumption

This paper estimates the strength and heterogeneity across households in state dependence associated with breakfast cereal consumption, where positive state dependence implies habit persistence and negative state dependence implies variety-seeking in consumption. The analysis relies on a discrete choice model and finds that breakfast cereal consumption is generally highly habitual, but the degree of habit persistence exhibits heterogeneity across households. In addition, some households can be characterized as variety-seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared to one-adult-households.consumer choice; habit persistence; food consumption; preference heterogeneity