When are Auctions Best?

We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can make bids before later entrants choose whether to compete. The sequential process is more efficient because entrants base their decisions on superior information. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry in several ways it usually generates higher expected revenue.

Exploring the key drivers behind the adoption of mobile banking services

This research examines the main drivers behind the adoption of mobile banking, a concept that has revolutionized the day-to-day activities of humans. A review of relevant literature on the topic, leads us toward testing the following key hypotheses: consumers are adopting mobile banking due to the perceived usefulness and benefits associated with the concept; and consumers are adopting mobile banking due to technological advances meaning increased access to the mobile phone devices. We published an online questionnaire on Amazon Mechanical Turk to obtain responses from Internet users. A dominating proportion of participants highlighted how mobile banking is a concept that they adopted between three and 5 years ago, showing just how recently mobile banking took off. The results also showed a number of links between the study’s research hypotheses and the adoption of mobile banking. The overall result of the study shows online banking as a concept that is influenced by a number of both internal and external factors. No single factor plays a dominating force in pushing retail bankers to adopt mobile banking, with it instead being a culmination of numerous different factors. The recent introduction of mobile banking is made seemingly apparent, as is the increasing susceptibility to change in the near future. Subsequently, countless opportunities for further academic research are likely to arise

The Impact of Brand Quality on Shareholder Wealth

This study examines the impact of brand quality on three components of shareholder wealth: stock returns, systematic risk, and idiosyncratic risk. The study finds that brand quality enhances shareholder wealth insofar as unanticipated changes in brand quality are positively associated with stock returns and negatively related to changes in idiosyncratic risk. However, unanticipated changes in brand quality can also erode shareholder wealth because they have a positive association with changes in systematic risk. The study introduces a contingency theory view to the marketing-finance interface by analyzing the moderating role of two factors that are widely followed by investors. The results show an unanticipated increase (decrease) in current-period earnings enhances (depletes) the positive impact of unanticipated changes in brand quality on stock returns and mitigates (enhances) their deleterious effects on changes in systematic risk. Similarly, brand quality is more valuable for firms facing increasing competition (i.e., unanticipated decreases in industry concentration). The results are robust to endogeneity concerns and across alternative models. The authors conclude by discussing the nuanced implications of their findings for shareholder wealth, reporting brand quality to investors, and its use in employee evaluation

Entry Deterrence in Markets with Consumer Switching Costs.

In many markets consumers have transaction or learning "switching costs" between functionally undifferentiated brands. New entry into such markets may be deterred either by large customer bases and/or large switching costs, which deny customers to an entrant, or by small customer bases and/or small switching costs, which mean an incumbent will respond aggressively to an entrant. An incumbent threatened by entry may therefore price either lower or higher than otherwise. A firm with the right to enter early may make less profits over time than an otherwise identical firm that is unable to enter the market until later

Welfare Effects of Entry into Markets with Switching Costs.

In many markets, consumers have costs of switching between products that are functionally identical. This note shows that entry of efficient low-cost competitors into these markets may be socially detrimental. In a linear model, entry reduces social welfare (as conventionally defined) in more than half of the relevant parameter space. In a more general model, there is always a range of values of switching costs for which entry reduces welfare, even if the entrant's production costs are lower than the incumbent's

© notice, is given to the source. When are Auctions Best?

JEL No. D44,G34,L13 We compare the two most common bidding processes for selling a company or other asset when participation is costly to buyers. In an auction all entry decisions are made prior to any bidding. In a sequential bidding process earlier entrants can make bids before later entrants choose whether to compete. The sequential process is more efficient because entrants base their decisions on superior information. But pre-emptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry in several ways it usually generates higher expected revenue