Product Variety under Brand Influence: An Empirical Investigation of Personal Computer Demand

Prior research suggests that brand may influence consumer preference for differentiated products. However, the extant literature does not measure how brand value affects product similarity and consumer choice. This paper examines demand response to the proliferation of personal computers (PCs). Using both the central processing unit (CPU) and brand as segmentation variables, I construct a two-level nested generalized extreme value (GEV) discrete choice model to estimate the brand values and product similarities of a set of PC vendors. With these estimates, I infer the relative efficacy of product variety for firms which possess different degrees of brand values. My results suggest that consumers treat PCs from the same firm as close substitutes, and the proximity of the PCs correlates positively with the firms?brand values. This finding suggests that there is decreasing demand returns to product variety for branded multiproduct firms. I discuss a few possible drivers of brand value, and explore the significance of product line extension in building long-term brand reputation.product variety, brand value, discrete choice, similarity, cannibalization

Technology Timing and Pricing In the Presence of an Installed Base

This paper studies a vendor.s timing and pricing strategies to tackle its own installed base when selling a newly improved product. We characterize the market with either a partly- or fully- covered installed base, consumers. relative willingness to pay for the newly improved version of the product, and their relative payoffs from delayed purchase. Instead of using the conventional assumption of constant consumer reservation price, we propose that if consumers already own an existing (old) version of a durable product, their willingness to purchase the newly improved version would increase over time. This effect, interweaving with consumer heterogeneity on valuation of quality and purchase history, may enable perfect intertemporal price discrimination (Salant 1989). We find that upgrade pricing may not be able to differentiate consumers with different purchase history when consumer heterogeneity is sufficiently high. Instead, the vendor would maximize its profit through intertemporal price discrimination, delayed product introduction, or pooling pricing. By overcoming the intractability of studying delayed product introduction in a market with heterogeneous consumers, this study analytically confirms Fishman and Rob.s conjecture (2000) that heterogeneity in consumers. valuation of quality may discourage a vendor to launch a new product. Particularly, consumers. anticipation of future price reduction can lead to delayed product introduction even when the extent of quality improvement embodied in the new product is high.New product introduction, intertemporal price discrimination, delayed product introduction, installed base, upgrade policy

The Economics of Privacy

This chapter reviews economic analyses of privacy. We begin by scrutinizing the “free market” critique of privacy regulation. Welfare may be non-monotone in the quantity of information, hence there may be excessive incentive to collect information. This result applies to both non-productive and productive information. Over-investment is exacerbated to the extent that personal information is exploited across markets. Further, the “free market” critique does not apply to overt and covert collection of information that directly causes harm. We then review research on property rights and challenges in determining their optimal allocation. We conclude with insights from recent empirical research and directions for future research.

Social Interaction, Observational Learning, and Privacy: the "Do Not Call" Registry

Many empirical studies have inferred contagion in behavior from a correlation between individual behavior and the behavior of others in the same social group, rather than from any direct evidence. The correlation has been variously attributed to social interaction, word of mouth communication, and observational learning. As Manski (1993) famously observed, such correlation might be explained by peer group influence, but also, similar responses to common environmental changes. More generally, correlation in behavior raises two questions – how information is transmitted and why individuals follow the choices of others. We address these questions in the context of subscriptions to the U.S. "do not call" registry in June-August 2003. Using a rich set of data culled from multiple sources, including longitudinal observations of household choice, we are able to separately identify -- Methods by which information is transmitted – social interaction and news media; -- Reasons why households follow the choices of others – observational learning and telemarketing diversion, and the impact of household heterogeneity on such learning and diversion. Among methods of information transmission, social interaction was relatively more important than news media. Among reasons for contagion, telemarketing diversion was relatively more important than observational learning, while the extent of learning decreased with social heterogeneity.

Delayed Product Introduction

We investigate the incentives of a monopolistic seller to delay the introduction of a new and improved version of his product. By analyzing a three-period model, we show that the seller may prefer to delay introducing a new product, even though the enabling technologies for the product are already available. The underlying motivation is analogous to that found in the durable goods monopolist literature – the seller suffers from a time inconsistency problem that causes his old and new products to cannibalize each other. Without the ability to remove existing stock of the old product from the market, shorten product durability, or pace research and development (R&D), he may respond by selling the new product later. We characterize the equilibria with delayed introduction, and study their changes with respect to market and product parameters. In particular, we show that delayed introduction could occur regardless of whether the seller can offer upgrade discounts to consumers, that instead, it is related to quality improvement brought about by the new product, durabilities, and discount factors. Further, we show that delayed introduction could bring socially efficient outcomes as well. Based on the insights of the model, we provide practical suggestions on pricing and policies

Using Genetic Programming as a Learning Tool in Discovering Financial Trading Rules

The growth of database systems has called for more advanced information retrieval and knowledge discovery tools. Genetic programming is proposed as one such tool and its characteristics and strengths are discussed in this paper. The application of genetic programming in learning security trading rules is also discussed

The Influence of Technology on Internet Brand Loyalty: An Exploratory Study

Acquiring new consumers is an expensive process. More often, profits are generated only during the later stage of serving loyal consumers. An increase in the number of e-businesses results in an urgency to better understand the concept of e-loyalty. This research therefore aims to provide some insights as to how technological aspects, namely Website quality and product/technology innovation, may contribute towards the building and strengthening of a loyal consumer base through the mediating influence of satisfaction. By performing confirmatory factor analysis on a set of survey data, we show that high Website quality and innovative products/services or technologies could reinforce consumer satisfaction, which in turn positively enhances the loyalty to an Internet brand

Opting-in or Opting-out on the Internet: Does it Really Matter?

Personal privacy has become one of the pressure points that comprises utmost primacy in the scientific community. An often debated privacy issue concerns the means of soliciting consent on the use of consumer information: should consumers be asked to object to the use of personal data (opt-out), or should they be asked to consent to the use of such data (opt-in)? These questions have been the center of controversy in Internet privacy for the past few years; various industry and consumer associations hold contradictory opinions on these questions. This paper integrates various theoretical perspectives that could potentially explain the difference in consumer participation between opt-in and opt-out configurations. Specifically, an experiment was conducted to observe the responses of a group of subjects under both opt-in and opt-out scenarios. In addition, we measured the privacy concerns of the subjects and examined whether these concerns could influence the effectiveness of the two registration mechanisms. Our results show that the use of opt-in and opt- out could induce different participation levels, and the disparity in participation was more substantial among the less privacy-concerned population. These findings provide valuable insights to regulatory bodies in formulating privacy policies and help Internet Web sites design proper data collection practices

Consumer Trust and Online Information Privacy

Getting consumers to disclose their personal information is an essential first step for Internet businesses that choose to pursue a niche marketing strategy. Previous research has examined how the reward preferences and privacy concerns of consumers may affect their disclosure tendency. However, it is not known how key characteristics pertaining to Internet businesses, such as consumer trust, may affect disclosure tendency. Based on the results obtained from a survey, this study found that consumer trust in Internet businesses can facilitate disclosure tendency. Moreover, consumer trust can suppress the reward preferences and privacy concerns of consumers, thereby reducing the costs that Internet businesses need to incur in collecting personal information from consumers