Retail environment and manufacturer competitive intensity

We study how the intensity of competition and the degree to which manufacturers enjoy market power depends on the retail environment in a given market. Past research has discussed the growing importance of retailers and the power they enjoy over manufacturers. Yet, the empirical literature to date has not determined which retail characteristics have the largest impact on competitive behavior.Our starting point is the estimation of a structural demand-and-supply model, where both consumers’ decisions and the strategic interactions between manufacturers and retailers are explicitly modeled. We identify the type of competitive behavior of manufacturers by measuring the deviation from a Bertrand-Nash equilibrium. This measure of competitive conduct is expressed as a function of key retail characteristics such as size of the retailer, its assortment depth, and category expertise.We illustrate the proposed approach using data for the ground coffee category in Germany. Our findings indicate that retail characteristics have indeed a significant effect on competitive intensity among upstream firms and on their ability to exercise market power. Hence, a manufacturer considering entry into a new market should not only take into account its competitors but also the specifics of the retail environment in this market.     

The socio-economic impact of certification schemes in conflict-affected regions: The case of arabica coffee in the Eastern DRC

The paper investigates the benefits of certification of cooperatives in conflict-affected areas. We study whether and how certification may contribute to attenuate the impact of conflicts on the members of coffee cooperatives in the Eastern DRC. We use an inverse probability weighted difference-in-difference approach to study data collected between December 2017 and October 2019 from four NGO-supported cooperatives. Two of these cooperatives got organic certification in 2018, of which one got an additional Small Producers Symbol (SPP) certification in 2018. Certified cooperatives allow Arabica coffee producers to access markets and buffer against drops in market prices. Results indicate that certified cooperatives were better able to resist the international price drop than non-certified cooperatives and the alternative informal markets. The results also suggest that certified cooperative members increased their sales to the cooperative instead of turning to informal side-selling. We find a decrease in reported food deficits by the members of certified cooperatives and an increase in the importance of coffee in their household's income. We conclude that certification is an effective way forward for smallholder coffee producers and cooperatives in unstable regions.     

Brand placements in video games: How local in-game experiences influence brand attitudes

Brand placements are omnipresent in video games, but their overall effect on brand attitudes is small and varies substantially between studies. The present research takes an evaluative conditioning perspective to explain when and how brand placements in video games influence brand attitudes. In two experiments with a 3D first-person video game, we show that only brands encountered during positive in-game experiences benefit from the placement, but not those encountered during negative in-game experiences. Building on the cognitive processes underlying evaluative conditioning, we also show that brand attitudes largely depend on the memory for the pairing of a brand with positive/negative in-game experiences. Pairing memory and thus also evaluative conditioning effects increase when players attend to the pairing of brands and positive/negative experiences, for example, when such pairings are a central part of the game's storyline. Overall, our findings show that evaluative conditioning and its cognitive mechanisms can be utilized to explain and predict advertising effects in applied settings, such as brand placements in video games.