Coupon Redemption and Its Effect on Household Cheese Purchases

By endogenizing unit value and coupon redemption, we estimate U.S. household cheese purchase, quality choice, and coupon redemption equations simultaneously. Zero purchases and missing values on coupons and unit values are taken into account in the model to correct for selectivity bias. Correlations among the three equations are found to be significant. Empirical findings show that high-quality choice significantly decreases cheese purchases, while cheese coupon usage significantly increases purchases. We find that higher income households select higher quality cheese, while larger households choose lower quality cheese. For coupon redemption, we find that African-American and Hispanic households redeem less, while Asian households have no significant difference compared to Caucasian households.     

The Impact of Generic Advertising on U.S. Household Cheese Purchases: A Censored Autocorrelated Regression Approach

The impacts of generic cheese advertising on U.S. household cheese purchases are examined via the use of a unique household panel. Modest gains in overall at-home cheese purchases from generic cheese advertising appear to be largely the result of strong gains in purchases of natural cheese rather than processed cheese. Results indicate that relatively larger gains in household cheese purchases from generic advertising may be realized by targeting infrequent purchasers to increase purchase frequencies, rather than by targeting households in general to increase their conditional purchase levels.     

Voluntary Funding for Generic Advertising Using a Provision Point Mechanism: An Experimental Analysis of Option Assurance

The mandatory nature of check-off programs remains a contentious policy issue. A provision point mechanism with a money-back guarantee offers an attractive, alternative voluntary funding approach, yet faces the problem of how to maintain future administrative capacity should contributions fall short of the funding threshold in the present period. To address this concern, a novel two-threshold, provision point mechanism is tested that sets a high threshold to fund marketing and a low threshold, if necessary, to secure administrative capacity for future advertising. Experimental results demonstrate that providing such "option assurance" sustains high overall contributions and, in some settings, can increase producer surplus.     

Testing for separability between commodity demand and labour supply in West Germany

In this paper we use a methodology for testing for separability of commodity demands from male and female labour supply on a single cross section. In the empirical section of our paper we apply the methodology to a representative micro data base for West Germany. We estimate the corresponding demand systems for nine goods, analyse their economic properties and test the hypothesis that male and female leisure are separable from commodity demand. We reject the hypothesis that goods are separable from male and female time. Moreover, we show the implications of our results for optimal taxation of goods and labour supply.     

The Problem of Free Riding in Voluntary Generic Advertising: Parallelism and Possible Solutions from the Lab

Producers of many commodities pay for generic advertising, which is a public good for producers and, in cases like healthy foods, enhances social welfare. Though most programs were initially funded through the Voluntary Contribution Mechanism, many became mandatory to mitigate free riding. This experimental research simulates key economic and psychological details of these programs and produces donation results strikingly similar to a historic example. Because mandatory programs may be declared unconstitutional, the Provision Point Mechanism is tested as an alternative. This research also shows that refund-by-request donation mechanisms establish a status quo of contributing and reduce free riding.     

The nature of an apology: An experimental study on how to apologize after a service failure

Extant service recovery research treats apology as a dichotomy, in that it is either present or absent, but how it is conveyed is neglected. Based upon social psychological research, this study argues that an apology comprises three different components: empathy, intensity, and timing, which make each apology unique. It is shown that how well an apology is delivered across failure types (outcome vs. process) drives service recovery satisfaction, not its mere presence. Empathy, intensity, and timing separately impact satisfaction. The more empathic and intense the apology is given, the more satisfied respondents are. A late apology decreases satisfaction ratings. Effect sizes indicate that empathy has the strongest impact on service recovery satisfaction followed by intensity and timing. The effect of empathy is stronger for process failures than for outcome failures. Interestingly, the apology’s overall effect size is comparable to that of compensation in case of a process failure.     

Measuring and testing advertising-induced rotation in the demand curve

Advertising can rotate the demand curve if it changes the dispersion of consumers’ valuations. We provide an elasticity form measure of the advertising-induced demand curve rotation in five demand models and test for its presence in the US nonalcoholic beverage market. The Almost Ideal Demand System (AIDS) model reveals that doubling advertising spending rotates the demand curves clockwise for milk, and coffee and tea with associated slope changes of 7 and 12%. Soft-drink advertising rotates its demand curve counterclockwise. Our policy suggestion is that milk and soft-drink firms time advertising to coincide with high-and low-price periods, respectively.     

Optimal quality threshold of admission in a two-sided farmers’ market

We develop a two-sided model for a farmers’ market where farmers value the number of consumers, and consumers value the number of farmers and the average product quality in the market. Consumer preference over product quality provides an incentive for the farmers’ market to exclude farmers of the lowest product quality. Using the model, we identify what factors the farmers’ market has to consider in determining the optimal quality threshold of admission, an issue that has not received any formal study. Those factors include the network effects between farmers and consumers, consumer preference over product quality and variety, and the quality spread among farmers. We also outline an empirical estimation strategy in order to make use of the model developed in this study.     

B2B or Not to Be: Does B2B E‐Commerce Increase Labour Productivity?

We implement an endogeneous switching‐regression model for labour productivity and firms’ decisions to use business‐to‐business (B2B) e‐commerce. Our approach allows B2B usage to affect any parameter of the labour productivity equation and to properly take account of strategic complementarities between the input factors and B2B usage. Empirical evidence from 1,460 German firms shows that there is a simultaneous relationship between labour productivity and the adoption of B2B. Firms deciding to use B2B e‐commerce employ their input factors more efficiently than non‐B2B users. Conversely, firms refrain from engaging in B2B probably because they expect the cost of B2B adoption will not be sufficiently compensated by productivity gains.