Pub Date : 2016-08-25DOI: 10.1007/s11129-016-9170-9
Bradley T. Shapiro
{"title":"Estimating the cost of strategic entry delay in pharmaceuticals: The case of Ambien CR","authors":"Bradley T. Shapiro","doi":"10.1007/s11129-016-9170-9","DOIUrl":"https://doi.org/10.1007/s11129-016-9170-9","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"14 1","pages":"201 - 231"},"PeriodicalIF":1.9,"publicationDate":"2016-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-016-9170-9","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52620786","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising rather than product-related benefits. Using detailed prescribing and pricing data from the prescription sleep aid market, I document significant adoption of the reformulation Ambien CR and show that it is not only driven by advertising. I use these estimates to evaluate two different policies designed to induce earlier entry of Ambien CR. I find that there are large potential gains in consumer surplus and in revenue.
{"title":"Estimating the cost of strategic entry delay in pharmaceuticals: The case of Ambien CR","authors":"Bradley T. Shapiro","doi":"10.2139/ssrn.2619253","DOIUrl":"https://doi.org/10.2139/ssrn.2619253","url":null,"abstract":"With the Hatch-Waxman Act of 1984, the FDA included an unchallengeable exclusivity period for newly approved drugs, independent of patents. This potentially generates an incentive for firms to strategically delay the introduction of new versions (reformulations) of drugs until just before patent expiration of the original drug. This way the reformulated drug competes mainly with newly introduced generics of the original drug. If instead, the reformulated drug was to be introduced well before the original drug’s patent expires, the reformulated drug would compete only with the original drug. While the pattern of strategic delay is well documented in the literature, its effects on consumers and firms are not. Reformulations may increase utility through improved efficacy and through fewer doses per day or a more even molecule decay rate. However, as suggested in the press and literature, it is also possible that the adoption of reformulated products is mostly the result of advertising rather than product-related benefits. Using detailed prescribing and pricing data from the prescription sleep aid market, I document significant adoption of the reformulation Ambien CR and show that it is not only driven by advertising. I use these estimates to evaluate two different policies designed to induce earlier entry of Ambien CR. I find that there are large potential gains in consumer surplus and in revenue.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"14 1","pages":"201-231"},"PeriodicalIF":1.9,"publicationDate":"2016-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.2619253","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68227108","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-06-01DOI: 10.1007/s11129-016-9167-4
Desmond Lo, S. Salant
{"title":"The strategic use of early bird discounts for dealers","authors":"Desmond Lo, S. Salant","doi":"10.1007/s11129-016-9167-4","DOIUrl":"https://doi.org/10.1007/s11129-016-9167-4","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"192 1","pages":"97 - 127"},"PeriodicalIF":1.9,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-016-9167-4","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52620073","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-06-01DOI: 10.1007/s11129-016-9168-3
Katja Seim, Michael Sinkinson
{"title":"Mixed pricing in online marketplaces","authors":"Katja Seim, Michael Sinkinson","doi":"10.1007/s11129-016-9168-3","DOIUrl":"https://doi.org/10.1007/s11129-016-9168-3","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"46 1","pages":"129 - 155"},"PeriodicalIF":1.9,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-016-9168-3","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52620103","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is an open question in antitrust economics whether allowing dominant firms to acquire smaller rivals is ultimately helpful or harmful to the long run rate of innovation and therefore long-term consumer welfare. I develop a framework to study this question in a dynamic oligopoly model where firms endogenously engage in investment, entry, exit and mergers. Firms produce vertically differentiated goods, compete by innovating on product quality, and can acquire rival firms to gain market power. In a benchmark model, mergers are modeled to be exclusively harmful to consumers in the short run by reducing competition and increasing prices. Despite this, under standard industry settings it is possible to show that the prospect of a buyout creates a powerful incentive for firms to preemptively enter the industry and invest to make themselves an attractive merger partner. The result is significantly higher rate of innovation with mergers than without and significantly higher long-run consumer welfare as well. Further results explore the circumstances under which this result is likely to hold. In order for the long run increase in innovation to outweigh the short run harm to consumers caused by mergers, entry costs must be low, entrants and incumbents must both have the ability to innovate rapidly, and the degree of horizontal product differentiation must be low. Alternatively, when dominant firms can directly incorporate the acquired firm’s innovation into their own product, mergers will typically benefit consumers in both the short run and long run.
{"title":"Horizontal mergers and innovation in concentrated industries","authors":"Brett Hollenbeck","doi":"10.2139/ssrn.2621842","DOIUrl":"https://doi.org/10.2139/ssrn.2621842","url":null,"abstract":"It is an open question in antitrust economics whether allowing dominant firms to acquire smaller rivals is ultimately helpful or harmful to the long run rate of innovation and therefore long-term consumer welfare. I develop a framework to study this question in a dynamic oligopoly model where firms endogenously engage in investment, entry, exit and mergers. Firms produce vertically differentiated goods, compete by innovating on product quality, and can acquire rival firms to gain market power. In a benchmark model, mergers are modeled to be exclusively harmful to consumers in the short run by reducing competition and increasing prices. Despite this, under standard industry settings it is possible to show that the prospect of a buyout creates a powerful incentive for firms to preemptively enter the industry and invest to make themselves an attractive merger partner. The result is significantly higher rate of innovation with mergers than without and significantly higher long-run consumer welfare as well. Further results explore the circumstances under which this result is likely to hold. In order for the long run increase in innovation to outweigh the short run harm to consumers caused by mergers, entry costs must be low, entrants and incumbents must both have the ability to innovate rapidly, and the degree of horizontal product differentiation must be low. Alternatively, when dominant firms can directly incorporate the acquired firm’s innovation into their own product, mergers will typically benefit consumers in both the short run and long run.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"18 1","pages":"1-37"},"PeriodicalIF":1.9,"publicationDate":"2016-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/ssrn.2621842","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68228441","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate the role of sales assistance in driving customer’s purchase decision using unique observational video data from a cosmetics retail chain. The data contain visual descriptors of customers and their in-store activities including the time they spent in interacting with salespersons ( sales assistance ), and are linked to their purchase decisions. Our empirical specification is based on the process of customer deciding to engage in sales assistance to acquire information meaningful toward purchase decision. Thus, we treat sales assistance as endogenous construct, and employ a control function approach to correct for this endogeneity using instruments pertaining to the supply of sales assistance. Our analysis quantifies the role of sales assistance in driving a customer’s purchase decision, and it shows that the effectiveness of sales assistance diminishes with its amount. In addition to highlighting the importance of sales assistance towards purchase decisions, our results also quantify how the retailer can influence sales assistance by increasing the availability of salespersons. We also examine the effect of sales assistance on in-store search carried out by the customer. Finally, we offer number of context specific insights into the heterogeneity of customers’ shopping and purchasing behavior.
{"title":"The Effect of Sales Assistance on Purchase Decisions: An analysis using retail video data","authors":"Aditya Jain, S. Misra, N. Rudi","doi":"10.2139/ssrn.2699765","DOIUrl":"https://doi.org/10.2139/ssrn.2699765","url":null,"abstract":"We investigate the role of sales assistance in driving customer’s purchase decision using unique observational video data from a cosmetics retail chain. The data contain visual descriptors of customers and their in-store activities including the time they spent in interacting with salespersons ( sales assistance ), and are linked to their purchase decisions. Our empirical specification is based on the process of customer deciding to engage in sales assistance to acquire information meaningful toward purchase decision. Thus, we treat sales assistance as endogenous construct, and employ a control function approach to correct for this endogeneity using instruments pertaining to the supply of sales assistance. Our analysis quantifies the role of sales assistance in driving a customer’s purchase decision, and it shows that the effectiveness of sales assistance diminishes with its amount. In addition to highlighting the importance of sales assistance towards purchase decisions, our results also quantify how the retailer can influence sales assistance by increasing the availability of salespersons. We also examine the effect of sales assistance on in-store search carried out by the customer. Finally, we offer number of context specific insights into the heterogeneity of customers’ shopping and purchasing behavior.","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"1 1","pages":"1-31"},"PeriodicalIF":1.9,"publicationDate":"2016-04-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68262209","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-03-01DOI: 10.1007/s11129-016-9165-6
Brett R. Gordon, Wesley R. Hartmann
{"title":"Advertising competition in presidential elections","authors":"Brett R. Gordon, Wesley R. Hartmann","doi":"10.1007/s11129-016-9165-6","DOIUrl":"https://doi.org/10.1007/s11129-016-9165-6","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"14 1","pages":"1 - 40"},"PeriodicalIF":1.9,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-016-9165-6","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52620335","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-03-01DOI: 10.1007/s11129-016-9166-5
Meghan R. Busse, Christopher R. Knittel, Jorge M. Silva-Risso, Florian Zettelmeyer
{"title":"Who is exposed to gas prices? How gasoline prices affect automobile manufacturers and dealerships","authors":"Meghan R. Busse, Christopher R. Knittel, Jorge M. Silva-Risso, Florian Zettelmeyer","doi":"10.1007/s11129-016-9166-5","DOIUrl":"https://doi.org/10.1007/s11129-016-9166-5","url":null,"abstract":"","PeriodicalId":46425,"journal":{"name":"Qme-Quantitative Marketing and Economics","volume":"14 1","pages":"41 - 95"},"PeriodicalIF":1.9,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1007/s11129-016-9166-5","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"52619985","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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