Three Paradoxes with The Cobb-Douglas Production Function

The output elasticities of inputs seem all about what an applied researcher is concerned with. The Cobb-Douglas production functions formulae possess the convenient property that the exponents of inputs readily represent the output elasticities of inputs such that the sum of these exponents reveal whether there are increasing, constant or decreasing returns to scale. However, there are also some inconveniencies with this type of production functions. In this paper we will investigate three of them. First of all, the short run marginal cost functions obtained from the Cobb-Douglas type of production functions can be both convex and concave depending on the magnitude of the technical coefficient of labor input. Unfortunately, this awkward behavior cannot be explained with the economic theory. Secondly, when the variable input labor with a given level of Technical productivity is complemented with a once-and-for-all increase in the amount of physical capital input, the labor becomes more and more productive as the usage of labor increases. This clearly stands in contrast with the Law of Diminishing Marginal Returns. Finally, we find ever-increasing returns to ‘Technical productivity of labor’, keeping the amounts of labor and physical capital constant, which is again surprising. Key words: paradox; convex and concave marginal costs; Cobb-Douglas production function; increasing rate of return to Technical productivity of labor. JEL classification: D2, D3, D4. DOI: 10.7176/EJBM/11-1-1

Analyzing Factors Affecting Repurchase Intention During Gezi Park Brand Protests

During the Gezi Park protests, some major brands were criticized within social media either for what they did or did not and social pressure to boycott those brands was highly apparent. Many newspaper articles highlighted that negative WOM during the protests might have affected consumers’ brand related knowledge. This notion is further supported by previous research. What happened during and after Gezi Park protests creates a perfect environment to analyze this effect. In addition, it was believed that only a portion of the consumers were highly affected by the protest calls. Consequently, this study aims to understand whether consumers have really changed their intention to buy from of a bank and a domestic coffee chain due to protest calls. The study also analyzes whether only a proportion of the consumers were affected and whether their trust, loyalty, awareness, perceived quality, and self-construal, and the company’s perceived social responsibility played a significant role in this change. A hierarchical logistic regression procedure (Forward Wald) with 357 usable cases was used with likelihood of change in purchase as the dependent variable. The results indicate that for the domestic coffee shop only perceived social responsibility plays a role in the change of consumers’ purchase intention. However, for the bank within the study, perceived social responsibility is found to be an insignificant contributor, whereas loyalty and awareness are found   to be significant contributors to consumers’ purchase decisions. Perceived quality/trust and consumers’ self-construal are found to have no effect on the change of consumers’ intention for both brands under study. Keywords: Brand Communication, Boycott, Brand Loyalty, Purchase Intentio

Brand Image, Satisfaction, and Brand Loyalty - How Effective Are They in the Automotive Industry Market Share

The study analyzes the influence of satisfaction, image, and loyalty on market share within the automotive industry by using real market data to capture market share of the car brands within the study. The results of the study confirm that automobile companies, which operate in a very competitive and dynamic environment need to ensure customer satisfaction and positive brand image, that collectively affect customer loyalty to keep sustainable growth. Keywords: brand image, brand loyalty, market share, satisfactio

Exploring Antecedents of Private Shopping intention: The Case of Turkish Apparel Industry

The objective of this study is to develop a research model to investigate the impacts of           (i) perceived benefits/risks of online shopping, (ii) the dimensions of both electronic service quality (e-SQ) and electronic service recovery (e-recovery) on electronic commerce satisfaction and electronic loyalty in the setting of private shopping business model among Turkish online shoppers. The hedonic/enjoyment benefit is the only significantly effective benefit of online shopping where other listed benefits and the risks appear to have an insignificant impact on electronic satisfaction. The e-SQ dimension of “system availability” and the e-recovery dimension of “compensation” were not considered significantly effective on e-satisfaction by the respondents, either. In congruence with the previous research findings, e-satisfaction is a major element of e-loyalty in the growing business of private apparels shopping in Turkey. Keywords: Private Shopping, e-service quality, e-satisfaction, e-loyalty