Returns Policies and Retail Price Competition

We show that returns policies do increase manufacturer profitability by attenuating price competition between retailers. This effect holds only in the presence of end-user demand uncertainty. The conditions under which a returns policy raises the manufacturer's profit are weaker when retailing is a duopoly than when retailing is a monopoly. This suggests that returns policies serve both to dampen competition and resolve demand uncertainty.channels, competition, returns, pricing

Parallel Imports and Music CD Prices

Parallel imports are a significant academic and policy issue. Official investigations into the impact of parallel imports on music CD prices have reached widely conflicting conclusions. This note reports an event study on an international panel of changes in copyright law to permit or disallow parallel imports. The study shows that, on average, legalization of parallel imports was associated with a 7.2–7.9% reduction in the retail price of music CDs.gray market, pricing

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.

Loss Leaders: An Indirect Empirical Test

We apply an indirect method to test for the extent of loss leader pricing. Specifically, the extent of loss leader pricing should increase with the profit from other regularly-priced items. Bookstores customarily use bestsellers as loss leaders. Among conventional bookstores, we found that the bestseller discount systematically increased with the store area, selection of titles, and presence of other product categories. A one standard deviation increase in store area was associated with a 3.7 (± 1.8) higher bestseller percentage discount. Among online stores, we found that the bestseller discount systematically increased with the selection of titles and number of product categories. A one standard deviation increase in selection was associated with a 9.5 (± 2.2) higher bestseller percentage discount.retail pricing, loss leaders, switching costs

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.

The Value of Online Information Privacy: An Empirical Investigation

Concern over online information privacy is widespread and rising. However, prior research is silent about the value of information privacy in the presence of potential benefits from sharing personally identifiable information. We analyzed individuals' trade-offs between the benefits and costs of providing personal information to websites. We found that benefits - monetary reward and future convenience - significantly affect individuals' preferences over websites with differing privacy policies. We also quantified the value of website privacy protection. Among U.S. subjects, protection against errors, improper access, and secondary use of personal information is worth US$30.49 - 44.62. Finally, we identified three distinct segments of Internet consumers - privacy guardians, information sellers, and convenience seekers.Information privacy, conjoint analysis, cost-benefit tradeoff, privacy concern, monetary reward, time-saving service

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

On the reliability of software piracy statistics

10.1016/j.elerap.2010.03.004Electronic Commerce Research and Applications95365-37

Damage measures for inadvertant breach of contract

International Review of Law and Economics193319-331IRLE

Buyer shopping costs and retail pricing: An indirect empirical test

Review of Marketing Science21-2