Essays On Consumer Shopping Behavior And Price Dispersion
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Essays On Consumer Shopping Behavior And Price Dispersion
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Author : Aleksandr Yankelevich
language : en
Publisher:
Release Date : 2011
Essays On Consumer Shopping Behavior And Price Dispersion written by Aleksandr Yankelevich and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with Electronic dissertations categories.
Essay 1: "Price-Matching in a Sequential Search Duopoly" While substantial research has tried to determine if price-matching guarantees are anti-competitive, most previous studies have overlooked the effect that these policies have on consumer search behavior. This essay examines how price-matching guarantees affect consumer behavior and prices in a model of sequential price search. By endogenizing consumers' acquisition of price information, I find that price-matching may raise prices in three new ways. First, price-matching diminishes firms' incentives to lower prices to attract consumers who have no cost of search. Second, for consumers with positive search costs, price-matching lowers the marginal benefit of search, inducing them to accept higher prices. Finally, higher prices may come about because price-matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium. These price increasing effects grow in proportion to the number of consumers who make use of price-matching guarantees as well as in the amount of asymmetry that prevails in equilibrium. Essay 2: "Asymmetric Sequential Search" (with Carmen Astorne-Figari) Rival firms often find themselves catering to a very different mix of customers from that of their competitors. This can lead to variations in pricing behavior even when other factors, such as product quality and the cost of production, are held constant across firms. In this essay, we use a model of sequential consumer price search to explore how asymmetries in the demand structures across firms impact firm pricing. In our model, a fraction of consumers must pay a cost to search for prices beyond their local firm and firms serve different fractions of local consumers. The price distribution of a firm with more local consumers first order stochastically dominates that of a firm with fewer local consumers and places positive probability on its upper bound. This means that a firm with more local consumers has a higher average price and runs sales less frequently. The frequency of sales diminishes in the number of local consumers, but price dispersion persists even if all consumers are local to a single firm. Moreover, as the fraction of consumers who search without cost increases, firms tend to offer bigger discounts, while the likelihood of a sale may fall. Essay 3: "Energizer: The Bunny or the Battery? Advertising as a Way to Publicize Either the Brand or the Good" (with Carmen Astorne-Figari) Experimental studies and surveys of consumers suggest that an important role of advertising is to convince consumers that they want the product and to buy it from the brand advertising it. However, because of competitive clutter, an advertisement that induces a consumer to enter the market may lead her to purchase from a competing brand. Thus, we can characterize two effects of advertising: (i) an effect that benefits the individual firm by promoting binding between the brand and the advertised good and (ii) a "public good" quality that benefits all producers of the good by inducing additional consumers to enter the market. We analyze these two effects to study the relationship between advertising and market size, price, firm profit and consumer welfare.
Three Essays On Consumer Search Behaviour In Experimental Market Environments
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Author : Changxia Ke
language : en
Publisher:
Release Date : 2010
Three Essays On Consumer Search Behaviour In Experimental Market Environments written by Changxia Ke and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Consumer behavior categories.
This thesis investigates consumer search behavior in different contexts and its implications on certain market outcomes. It consists of three self-contained essays. Part one investigates if people search optimally and how price promotions (such as the provision of price discounts) influence search intensity and risk-taking behavior. We start with a typical sequential search task in a finite time horizon (with exogenously determined price dispersion) as the baseline treatment. In the two experimental treatments, exogenous discounts are introduced to the search process. The treatments differ in the amount of information on the discounts revealed to the subjects. Subjects' search behavior is roughly consistent with optimality for a risk-neutral agent, but significantly influenced by the introduction of discount vouchers. We find that subjects' search intensity is significantly reduced if they are in a shop that offers discounts, even when the monetary benefit induced by the discount has been taken into account. This suggests that people seem to gain extra non-monetary utility from buying a discounted product. Alternatively, subjects might overestimate the value of a discount. Following the findings in part one, we focus on price-framing effects of discounts on consumer search behavior in part two. In order to isolate the price-framing effect from all other possible influences, we adopt an extremely simple two-shop search model in which a consumer who sees the price for an item in a shop has to decide either to buy it or to incur a search cost to learn the ex-ante uncertain price in a second shop. The experiment is designed such that a rational buyer should make identical decisions in the base treatment (where prices are posted as net prices in both shops) and in the experimental treatments (where the price in one of the shops is framed as a gross price with a discount, holding the net-price constant). Using structural estimation of the observed risk preferences, we find that people tend to be more risk-averse and hence buy from the initial shop more often in the discount treatments, regardless of where the discount is offered. The seemingly trivial change to a discount-framing increases the complexity of the decision problem. Subjects reveal a tendency to stick with the comparatively less complex options more frequently as the complexity of the decision problem increases. However, this bias declines with experience, as subjects become more and more familiar with the framing. In part three, we study search behavior in a market experiment, where prices are determined endogenously by human players. More specifically, we examine the behavioral factors and the underlying mechanism which drive the widely observed asymmetric price adjustment to cost shocks (in a world with costly search behavior and information asymmetry). We show that price dispersion, as well as asymmetric price adjustment to cost shocks, arises in experimental markets, even though the standard theory predicts neither. We find that after controlling all the potential theoretical factors, the observed price dispersion can be explained by the presence of bounded rational play. Under price dispersion, asymmetric price adjustment arises naturally, as it is harder for buyers to learn that a negative cost shock has taken place. Learning is much quicker after a positive shock.
Essays On Price Dynamics And Consumer Search
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Author : Matthew Stephen Lewis
language : en
Publisher:
Release Date : 2004
Essays On Price Dynamics And Consumer Search written by Matthew Stephen Lewis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.
Essays On Consumer Purchase Behavior And Competitive Firm Strategies
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Author : Andy Wei-Rong Chen
language : en
Publisher:
Release Date : 2016
Essays On Consumer Purchase Behavior And Competitive Firm Strategies written by Andy Wei-Rong Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
The two essays explore two topics in marketing - consumer purchase behavior and competitive firm strategies. The first essay examines consumer stockpiling behavior in the retail gasoline market and aims to shed light on what factors affect consumer stockpiling. Past research on consumer stockpiling behavior such as Hendel and Nevo (2006) finds evidence of inter-temporal substitution by consumers that implies stockpiling behavior. However, they do not observe actual inventory or consumption and have to rely on simplifying assumptions about these quantities. I collect a novel data set of gasoline purchase history of consumers with actual inventory and consumption to test several hypotheses that relate consumer stockpiling to price, duration between purchases, and consumption. First, I find that consumers holding more inventory are more price sensitive. Higher inventory increases the impact of price on purchase decisions and those with higher inventory can afford to do more price search before making a purchase. I also find that all else equal, consumers will reduce consumption following a purchase made during high prices; that consumers with lower inventory have a higher probability of purchasing; and that duration from previous purchase is shorter for purchases made during low prices and longer during high prices. The second essay examines competition in a dynamic setting between Wal-Mart and Target in the context of location choices and expansion strategies. Studying this topic sheds light on how an industry evolves and how the market structure is shaped by decisions such as when to enter and exit and where to locate new stores as well as the driving force behind different expansion strategies. One of the early papers by Bresnahan and Reiss (1991) study entry of retail and professional services into isolated markets in a one-shot game. In their model, firms are allowed to enter once and open one store. Collard-Wexler (2014) estimates a model of investment and entry in the ready-mix concrete industry. Again, each firm is assumed to own a single plant in the model. In my paper, I build a structural model in which firms can open multiple stores over a period of time. This setting is closer to reality as competition between firms lasts over many periods with firms making regular entry decisions and often opening multiple stores in the same market. I estimate how entry decisions are affected by competitor's presence and market characteristics and learn about the evolution of market structure and expansion strategies of the firms. The firms are forward-looking and engage in Markov perfect equilibrium (MPE) strategies. The results show that firm profits are affected asymmetrically by the competitor's presence. First, Wal-Mart is the dominant firm with higher profits regardless of Target's presence. On the other hand, Target's profits depend a lot on Wal-Mart's presence. It must have more stores than Wal-Mart (called store advantage) to profit. I also find asymmetry in the expansion strategies of the two firms. Wal-Mart tends to explore new and smaller markets by being the first and often the only firm to enter, while Target tends to focus on major markets with high population and GDP and strives to maintain store advantage over Wal-Mart by matching or outdoing Wal-Mart's decision to open new stores.
Economic And Empirical Analysis Of Consumer Purchase Intentions In Electronic And Traditional Retail Channels Internet Retailer Pricing Strategies And Price Dispersion On The Internet
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Author : Bo-chiuan Su
language : en
Publisher:
Release Date : 2002
Economic And Empirical Analysis Of Consumer Purchase Intentions In Electronic And Traditional Retail Channels Internet Retailer Pricing Strategies And Price Dispersion On The Internet written by Bo-chiuan Su and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with categories.
Essays On Consumer Behavior In Retail Stores
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Author : Edward Ku Cho
language : en
Publisher:
Release Date : 2007
Essays On Consumer Behavior In Retail Stores written by Edward Ku Cho and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
(Cont.) A likely explanation for this positive correlation is that customers simply care more about the prices of some products than others. Also, customers respond more to low prices on items for which they have good price knowledge, but respond more to low price claims when their price knowledge is poor, although this is a second order effect.
Essays On Consumer Behavior And Analytics
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Author : Prabhanjan Didwania
language : en
Publisher:
Release Date : 2022
Essays On Consumer Behavior And Analytics written by Prabhanjan Didwania and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
The first chapter of my dissertation is joint work with Professor Karsten Hansen. This chapter examines gender differences in grocery retail shopping. We used consumer transaction data over the length of 12 years to find that the typical female consumer is less concentrated in choice of retail outlet, product category, brand choice and is more responsive to promotions than male shoppers. The findings are confirmed in both the "raw data" and regression analysis (including other demographic factors). The second chapter is a solo-authored paper. Chapter 2 examines consumer behavior in response to manipulations of an increasingly popular price framework, called 'drip pricing'. Our research is the first to provide insights through the manipulation (salience, magnitude, and type) of its two primary elements: the base price and surcharges. We conduct eight field experiments on a popular travel platform to document causal effects on the search and purchase process. My findings confirm the importance of the headline price as an 'anchor' in this framework; additionally, its removal led to higher quality tickets purchased but led to a reduced quantity of tickets sold. When surcharge information is shrouded, customers are not information seeking and did not seek price information and made purchases based on the most pertinent data. Consumers are more sensitive to changes in fees at lower prices and are responsive to variations in the type of surcharge. Additionally, customers are responsive to taxes rather than fee surcharges.
Bargains And Rip Offs
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Author : Dennis Eggert
language : en
Publisher: GRIN Verlag
Release Date : 2007-09
Bargains And Rip Offs written by Dennis Eggert and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-09 with Business & Economics categories.
Seminar paper from the year 2006 in the subject Economics - Industrial Economics, grade: 1,0, Helsinki School of Economics, course: Industrial Organisation, 18 entries in the bibliography, language: English, abstract: The main issue in the article is the derivation of a model in which prices can differ in equilibrium, even though the goods are homogeneous and there is asymmetric information in the market. The reason for this price dispersion is caused by consumer heterogeneity. Salop and Stiglitz explain, that "because of differences in preference or ability, some agents perform much better than others in market decisions." To model this kind of heterogeneity they assign different costs of gathering certain information to the consumers. For simplicity they part the consumers in two groups: The first one consists of low-cost information gatherer and the other group has higher cost to gain complete information. For further simplicity there are just two levels of information: to be completely informed or to be not informed at all. Furthermore the costs to become an informed consumer are fixed. The differences in information in this model regard the locations of the shops. All consumers know about all prices that are in the market, they just do not know where the shop with a certain (the lowest) price is. The shops on the other hand have complete information about the market. They know about the differences between the consumers and can compute the demand that will occur, when they ask a certain price. So they face a trade-off between higher prices and lower demand. It is important to state why there is a possibility of raising the price and not to loose all demand like it would be in a perfect market. When the rise in price is not too high, it does not pay for the high-cost information gatherer to become completely informed. Their expected loss by buying randomly either in low- or high-priced shops is lower than the fixed cost of gathering the information. All toget
Price Dispersion And Retailer Behavior
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Author : Ying Zhao
language : en
Publisher:
Release Date : 2001
Price Dispersion And Retailer Behavior written by Ying Zhao and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001 with categories.
Essays In Consumer Behavior And Pricing
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Author : Ammara Mahmood
language : en
Publisher:
Release Date : 2014
Essays In Consumer Behavior And Pricing written by Ammara Mahmood and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with Consumer behavior categories.