Consumer sensitivity to changes in tax policy on consumption of alcohol

Marketers and economists have followed the consumption patterns of alcoholic beverages for many years. Public officials have studied the negative effects of consuming alcohol and have advocated a variety of measures to curtail consumption. Previous studies have also measured the price elasticity. This comparative study is based on a 40‐year analysis, and compares the consumption patterns for beer, spirits and wine in three Nordic countries. Although the cultural context of Denmark, Norway and Sweden are similar, nevertheless significant differences in the patterns of consumption and prices for alcoholic beverages have been evidenced overtime. A comparison of the per capita drinking patterns and the taxation effectiveness are presented. Even though the elasticities varied, the data indicate relative sensitivity to price changes and a decline in spirits consumption as well as switching effects to lower alcohol‐content beverages.     

中国房地产财富效应测度的实证研究

中国居民的财富特征与发达国家居民的财富特征明显不同。利用中国1996—2007年房地产价格和居民消费的季度数据,建立房地产财富效应模型,对中国房地产财富效应进行测度,计算结果表明:随着中国经济增长和居民收入的增加,房地产财富对居民消费的影响不断增强。房地产价格变化是居民消费增加的Granger原因,居民消费的增加是城镇居民可支配收入上升的Granger原因。无论从长期还是短期分析,中国房屋价格变动都会给居民消费带来财富效应。通过脉冲响应函数分析可知,房地产价格的正向冲击将对居民消费产生正效应,导致居民消费增加,从而验证了中国房地产财富效应的存在。     

Distributional Effects of Lower Food Prices in a Rich Country

Controlling for differences in taxes and transportation costs, the Nordic Competition Authorities claims, in a report from 2005, that food prices are 11% higher in Sweden compared to the EU-15 countries. One explanation for this put forward in the report is the limited competition on this market which suggests there to be a potential for lower food prices. This paper focuses on distributional effects of a price decrease on food. Based on a simple model of household utility, the households demand for food is derived and estimated. Price and income elasticities for different income groups are then calculated based on these parameter estimates. Our results suggest that food is a normal good with an average income elasticity of approximately 0.18 and a price elasticity of 0.45. In addition, and of importance from a policy perspective, the results indicate the income elasticity to differ across income groups while price elasticities are constant.     

The Impact of Price Disclosure on Dynamic Shopping Decisions

A potentially powerful way to assist consumers in making dynamic shopping decisions is to disclose price information to them before they shop, for example by posting prices on the Internet. This paper addresses the differential impact of disclosing either only current, or both current and future prices, on consumer shopping decisions in multi-period tasks involving multiple product purchases. In the context of an Internet-based experiment, we find that consumer expenditure deviates more strongly from that of a normative model when both current and future prices are disclosed than if only current prices are disclosed. We investigate the behavioral effects underlying this finding by estimating a model that allows for variations in consumer discounting, strength of store price format preferences, as well as choice consistency between different price disclosure conditions.     

Why do European consumers smoke? Responses from the rational addiction model

In this paper, we test whether European consumers are addictive smokers and, if this is the case, then whether such addictions can be explained by the rational addiction theory. To this end, we start from a non‐separable intertemporal utility function, which allows us to derive a demand function that is estimated using tobacco time‐series. The results are in accordance with the model of rational addiction for all European smokers. Thus, we observe the addictive character of tobacco consumption and, secondly, we note that the addiction is not the result of myopic consumer behaviour, but rather of the maximization of total utility, implying that consumers consider the future effects of their current decisions.     

Quality signaling via strikethrough prices

Why do firms often advertise their current price together with their past price? Although consumers expect high quality products to have high prices, such firms may optimally charge lower prices when faced with low production costs. Thus in markets in which quality is difficult to ascertain and costs often fall over time, for example technology products, high quality firms may face a challenge of signaling their quality through current price alone. In this paper we develop a price signaling model in which uninformed consumers draw inference not only from the current price but also the prior period's price (the “strikethrough price”) if the firm chooses to disclose it. We find that a high quality firm benefits from using strikethrough pricing when the prior probability of high quality is relatively low while the probability of costs falling is relatively high.     

How long has it been since the last deal? Consumer promotion timing expectations and promotional response

When modeling consumers’ forward-looking behavior using choice data on frequently purchased products, the common approach assumes that consumers have rational expectations about future promotions. Previous studies modeled such expectations using a first-order Markov (FOM) process. However, empirical evidence from several categories suggest that inter-promotion intervals can last several weeks implying that a FOM process that conditions future expectations of prices only on current-period prices can be limiting. We utilize a Proportional Hazard model (PHM) to characterize consumers’ rational expectation of future price promotion. We first show that estimating a dynamic structural model that uses a FOM specification for rational expectations can bias estimates of promotion effects with both simulation analysis and scanner panel data from four consumer packaged goods product categories. Secondly, we empirically show that a structural model employing a PHM specification for promotion expectations fits the data better than ones that assume only a FOM price or promotion expectation. Lastly, we show using an analysis of promotion policy changes that a structural model with a FOM expectation can lead to suboptimal managerial decisions.     

A simple test for distinguishing between internal reference price theories

A large literature demonstrates the empirical importance of internal reference price effects. There are several theories regarding how and why these effects arise. We offer a simple test that distinguishes between the two leading theories based on economically rational behavior: price as a signal of quality and price as a predictor of future prices. Our test builds on differences in how past consumer purchases interact with internal reference prices. We first validate the reliability of our test by applying it to synthetic data. We then apply our test to purchases of ketchup and diapers and find: (1) quality signaling is the dominant mechanism behind reference price effects in both categories; (2) consistent with the quality-signaling theory, reference price effects diminish as various measures of consumer experience increase; but (3) in both categories there are many individuals for whom price-prediction effects dominate quality-signaling effects.     

De-marketing Tobacco Through Price Changes and Consumer Attempts Quit Smoking

Using panel data from three Canadian provinces, this article examines the relationship between the de-marketing of tobacco products through provincial-level price increases and consumers’ attempts to quit smoking as measured by the uptake of tobacco replacement therapies. We ground our hypotheses in the rational addiction model and the theory of planned behavior. Our analyses suggest a positive, one-month lagged effect of a price increase of tobacco products on the uptake of tobacco replacement therapies. This effect dissipates 3 months later, suggesting that there is a critical period for aggressive de-marketing of tobacco products. We discuss the implications of these results for theory and future research into de-marketing harmful consumer products.     

制裁政策对澳大利亚煤炭价格影响研究

2020年二季度,中国与澳大利亚的贸易关系出现恶化。将中国对澳大利亚进口煤炭的制裁政策作为一次准自然实验,将2018—2020年的进口煤炭、国内煤炭价格作为研究对象,利用双重差分与三重差分回归模型,着重研究了制裁政策对相关进口煤炭的价格效应。结果发现:进口制裁政策对澳大利亚5500大卡煤炭价格产生了负向价格效应,负向价格效应在制裁政策发布当期最显著,随后影响逐渐消退;制裁政策不会对澳大利亚出口其他国家的煤炭价格产生影响;在控制了煤炭消费、汇率等因素的影响后,新冠肺炎疫情对国内外煤炭价格产生的冲击并无显著差异。     

Sequential Product Design

I consider a model of duopoly where firms make sequential product design changes prior to price competition. I show that a socially desirable outcome is possible in this model. In equilibrium, the leader's product is less specific, implying a customer attraction strategy, and the follower's product is more specific, implying a customer retention strategy. This outcome is in contrast with the equilibrium outcome of a similar model, where simultaneous design competition takes place prior to price competition. In this latter model, the product designs are more specific and the prices are higher in equilibrium, leading to a reduction in welfare. I compare the design incentives under price competition with those in models where price collusion or merger is expected and with multi-product monopoly. In models with no price competition, less specific designs may serve to attract more customers, to improve current or future pie of monopoly profits, or to improve the outside option in bargaining game, depending on the model.     

Duopolists’ Retail Pricing Behavior in Multiple Markets

The law of one price asserts that, with costless trade, prices for identical goods in different countries should be equal after accounting for the exchange rate. The empirical literature suggests that exchange rate pass-through to prices is low and that the law of one price fails; instead, firms are more likely to price to market. This study adds to the literature by examining the pricing strategy of comic book firms within the context of the competition’s pricing behavior in a duopoly industry. Comic books, uniquely, display their retail prices in multiple countries on their cover giving us detailed information about the pricing behavior of each individual firm and their competition which allows us to test a pricing-to-market model. We find that an empirical model of an imperfectly applied law of one price outperforms a simple competitive, pricing-to-market model of pricing. Retail exchange rate pass-through rates between Canada and the United States average 76.8 %. This high exchange rate pass-through rate for comic books exists despite the existence of sticky prices and convenience pricing.     

Trade barriers and the relative price of tradables

In this paper I quantitatively address the role of trade barriers in explaining why prices of services relative to tradables are positively correlated with levels of development across countries. I argue that trade barriers play a crucial role in shaping the cross-country pattern of specialization across many tradable goods. I construct a multi-country, general equilibrium model of trade and derive tractable predictions that show how specialization affects relative prices. I calibrate the model to match the patterns of prices, levels of development, and bilateral trade across 103 countries. Through counterfactuals I find that removing trade barriers eliminates more than half of the gap in the relative price of services between rich and poor countries with only a minimal systematic effect on the absolute price of tradables.     

The impact of external reference price on consumer price expectations

Comparative pricing practices are frequently used where actual product prices are accompanied by higher external reference prices. All types of stores, regular-price department stores as well as discount stores, use comparative price claims to frame price deals as attractive [Marketing Science 4 (1985) 199]. In this paper, a quadratic model is specified for the impact of external reference price (ERP) on consumer price expectations. Based on the research on communication discrepancy and advertising claim discrepancy, which in turn draw on assimilation-contrast, attribution, and prospect theories, we hypothesize a quadratic effect of external reference prices on consumer price expectations. An interactive, computer-controlled experiment using multiple levels of ERP is used to estimate the proposed model. As hypothesized, support for an inverted U-shape relationship is found between consumers’ updated price expectations and the difference between ERP and initial price expectations. That is, as the difference between ERP and subjects’ initial price expectations increases, subjects’ updated price expectations increase to a point and then start to decrease. We find that the fit of the quadratic model specification for the effect of external reference price on price expectations is noticeably superior to that of linear, logarithmic, square root, and S-shaped specifications. Finally, we provide implications of our results for both retail managers and for regulatory authorities alike.     

Stock price informativeness and analyst coverage

We examine whether more analyst coverage translates into more informative stock prices and apply this to both developed and emerging markets. We measure price informativeness using the association between current stock returns and future earnings. We argue that more informative stock prices contain more information about future earnings. Results indicate that analysts' activities do not contribute to the impounding of future earnings information into current stock prices, in accordance with the view that analysts are outsiders who do not have full access to firm‐level information. We also find that analysts specialize according to industry and that “industry expertise” is limited to developed countries. Overall, our evidence is consistent with the explanation that analysts focus on gathering and mapping industry‐ and market‐level information (macroeconomic information) into stock prices. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.     

Beware the Challenge of the Importers

Advertising bans can increase or decrease alcohol consumption due to effects on beverage choice, price competition, and substitution by producers towards non-banned media. We study bans on broadcast advertising in 17 OECD countries for the years 1977 to 1995, in relation to per capita alcohol consumption, liver cirrhosis mortality and motor vehicle fatalities. The results indicate that advertising bans in OECD countries have not decreased alcohol consumption or alcohol abuse.     

Price Font Disfluency: Anchoring Effects on Future Price Expectations

Novel, unique, or otherwise disfluent fonts are often used to draw consumer attention. However, disfluent fonts may also create metacognitive processing challenges. Therefore, consumers may devote more cognitive resources to process disfluent price fonts and will consequently be more likely to accurately recall and anchor on disfluent price displays when forming their future price expectations. Three experiments demonstrate that disfluent sale prices can reduce future price expectations, while disfluent manufacturer-suggested retail prices (MSRPs) can increase future price expectations. Additionally, price recall accuracy mediates the effect. Moderation analysis demonstrates that disfluent MSRP displays are more likely to affect price-conscious and less-involved consumers.     

On the efficiency of monetary policy rules with flexible prices and rational expectations

The classic Sargent–Wallace–Lucas (SWL) rational expectations-flexible price model is usually interpreted as implying “policy ineffectiveness”: systematic monetary rules cannot affect the distribution of real output. A contrary but not widely-appreciated result of Dotsey and King suggests that there exist “prospective feedback” rules (future money depending systematically on current but as yet unobserved information) which improve output distribution by means of improving agents’ ability to perceive relative prices.We show the Dotsey–King proposition in fact to be a colossal understatement: prospective feedback rules applied vigorously enough (and even “contemporaneous feedback” rules based on current interest rates, provided at least one prospective feedback is active) can in the limit drive price-perception errors to zero. This is not to say such a policy would be desirable. Feedback parameter combinations that reduce current price level misperception tend to produce high forecast error variances with respect to future prices, with attendant loss in capital market efficiency. Whatever the desirable frontier among these different social cost-producing variables, feedback parameters will in general be needed in order to get on the frontier as well as to move along it. Monetary policy clearly produces social gain even in a version of this model which contains no elements of price “friction,” inefficient use of available information, or asymmetry in information as between the government and the public.     

高房价的成因与房产税改革构想

近年来我国房价大幅度上涨,居高不下的房价不仅给百姓生活带来的巨大压力,也给国民经济健康发展造成了极大的困扰,因此政府部门应对房价进行有效干预。房产税具有取得财政收入、调节房产收益、影响经济运行的功能,但现行房产税制却违背了税收量能负担原则、削弱了税收调节分配功能,应借鉴房产税改革试点城市的经验,加快房产税制改革的步伐,以促进房产市场价格回归理性,更好地保障房地产市场持续、健康有序发展。     

中国医疗服务价格形成机制的发展与健全对策

中国医疗服务价格形成在过去70年经历了4个阶段的发展,从政府定价到政府指导价和市场调节价并行,老百姓依然面临"看病难""看病贵"的问题,社会医疗资源未得到充分利用。应借鉴西方发达国家的有益经验,坚持解决"看病难"和"看病贵"同步推进,坚持医院机构去行政化和引入竞争并重,坚持市场形成价格和激励医疗机构降低费用并重,同步推进相关领域的配套改革,不断健全中国医疗服务价格形成机制。