Geography and acquirer returns

We examine the impact of geographical proximity on the acquisition decisions of US public firms over the period 1990–2003. Transactions where the acquirer and target firms are located within 100 km of each other are classified as local transactions. We find that acquirer returns in local transactions are more than twice that in non-local transactions. The higher return to local acquirer is not explained by related, either horizontal or vertical, industry transactions, and appears to be related to information advantages arising from geographical proximity. These information advantages facilitate acquisition of targets that, on average, create higher overall return. The higher return to local acquirers is preserved by the use of target termination fee contracts.     

Can price dispersion in online markets be explained by differences in e-tailer service quality?

It has been hypothesized that the online medium and the Internet lower search costs and that electronic markets are more competitive than conventional markets. This suggests that price dispersion of an item with the same measured characteristics across sellers at a given point in time for identical products sold by e-tailers online should be smaller than it is offline, but some recent empirical evidence reveals the opposite. Based on an empirical analysis of 105 e-tailers comprising 6.739 price observations for 581 items in eight product categories, the authors show that online price dispersion is persistent, even after controlling for e-tailer heterogeneity. The general conclusion is that the proportion of the price dispersion explained by e-tailer characteristics is small. Also, after controlling for differences in e-tailer service quality, prices at pure-play e-tailers are equal to or lower than those at bricks-and-clicks e-tailers for all categories except books and computer software. Xing Pan is a doctoral candidate in marketing at the Robert H. Smith School of Business, University of Maryland. His research interests include pricing, electronic commerce, industrial organization, and consumer economics. His dissertation, which investigates price dispersion and price competition in online retail markets, won the 12th Annual Doctoral Research Fellowship awarded by the Economic Club of Washington. He has published in theAdvances in Applied Microeconomics and has presented several papers at Marketing Science conferences and MSI conferences. Brian T. Ratchford holds the Pepsico Chair in Consumer Research at the Robert H. Smith School of Business at the University of Maryland. He holds M.B.A. and Ph.D. degrees from the University of Rochester. His research interests are in economics applied to the study of consumer behavior, information economics, and marketing productivity. He has published more than 30 articles in the leading journals in marketing and related fields, includingJournal of Consumer Research, Marketing Science, Management Science, andJournal of Marketing Research. He is past editor ofMarketing Science and currently on the editorial review boards ofJournal of Consumer Research, Journal of Marketing Research, andJournal of Retailing. Venkatesh (Venky) Shankar is the Ralph J. Tyser Fellow and a professor of marketing and entrepreneurship at the Robert H. Smith School of Business, University of Maryland. His research interests include e-business, competitive strategy, international marketing, pricing, innovation, and supply chain management. His research has been published in journals such as theJournal of Marketing Research, Marketing Science, Marketing Letters, and theJournal of Retailing. He is an associate editor ofManagement Science and is also on the editorial boards ofMarketing Science, International Journal of Research in Marketing, Journal of Retailing, and theJournal of the Academy of Marketing Science. He was a visiting faculty member at the Sloan School of Management, MIT, last year and has also taught at the Chinese European International Business School, Shanghai.     

Cobranding arrangements and partner selection: a conceptual framework and managerial guidelines

Cobranding, the strategy of marketing brands in combination, has received increasing attention from academics and practitioners alike. This study examines two cobranding decisions facing a firm: the cobranding structure and the selection of a partner. Propositions rooted in the theories of attribution and categorization posit (a) how the levels of cobranding integration, exclusivity, and duration influence brand evaluation and consideration and (b) how consistency with the partner brand in hedonic attributes, complementarity in functional attributes, and brand breadth moderate the effect of partnership structure. Higher integration or longer duration likely has a greater impact on evaluation and consideration; an exclusive arrangement has a greater effect on evaluation but lowers consideration. For managers, these propositions are directly applicable; the outcomes of brand evaluation and consideration map onto the strategic goals of brand development and market development, respectively.     

Network effects and competition: an empirical analysis of the home video game industry

Building on the resource‐based view of the firm, we advance the idea that a firm's customer network can be a strategic asset. We suggest that network effects are a function of network size (i.e., installed customer base) and network strength (i.e., the marginal impact of a unit increase in network size on demand). We empirically study these network effects in the 16‐bit home video game industry in which the dominant competitors were Nintendo and Sega. In the spirit of the new empirical IO framework, we estimate a structural econometric model assuming the data are equilibrium outcomes of the best fitting noncooperative game in price and advertising. After controlling for other effects, we find strong evidence that network effects are asymmetric between the competitors in the home video game industry. Specifically, we find that the firm with a smaller customer network (Nintendo) has higher network strength than the firm with the larger customer base (Sega). Thus, our results provide a possible explanation for this situation in which the firm with a smaller customer network (Nintendo) was able to overtake the sales of a firm with a larger network size (Sega). Copyright © 2002 John Wiley & Sons, Ltd.     

Mobile Marketing in the Retailing Environment: Current Insights and Future Research Avenues

Mobile marketing, which involves two- or multi-way communication and promotion of an offer between a firm and its customers using the mobile, a term that refers to the mobile medium, device, channel, or technology, is growing in importance in the retailing environment. It has the potential to change the paradigm of retailing from one based on consumers entering the retailing environment to retailers entering the consumer's environment through anytime, anywhere mobile devices. We propose a conceptual framework that comprises three key entities: the consumer, the mobile, and the retailer. The framework addresses key related issues such as mobile consumer activities, mobile consumer segments, mobile adoption enablers and inhibitors, key mobile properties, key retailer mobile marketing activities and competition. We also address successful retailer mobile marketing strategies, identify the customer-related and organizational challenges on this topic, and outline future research scenarios and avenues related to these issues.     

Decentralized evolutionary mechanisms for intertemporal economies: A possibility result

We consider a stationary, infinite horizon aggregative model with one consumer and one producer living in each period. A decentralized intertemporal mechanism, satisfying the following evolutionary property, is constructed: if the current period's producer and consumer verify their equilibrium conditions, then the allocation is actually executed, without further verification by future agents. The mechanism is based on the idea of continual planning revision. It is shown that the outcome is an intertemporally efficient allocation which maximizes the long run average of one period utilities from consumption.We would like to thank L. Hurwicz, E. Malinvaud, and R. Radner for valuable discussions, and two referees for helpful comments. Research on this project was partially supported by a National Science Foundation Grant.     

Reconstructing dynamics from intertemporal economic data

Summary This paper is concerned with the relationship between a continuous dynamical system and the trajectory generated by such a system. The main result provides necessary and sufficient conditions for an infinite data stream to be rationalized as the output of a continuous law of motion. The paper develops concepts of informativeness of a given set of intertemporal data and shows that informativeness is maximal when the data is chaotic. It also demonstrates that with probability one the sample paths from a non-trivial independent and identically distributed stochastic process cannot be rationalized as the output of a continuous deterministic system. Two impossibility results are discussed which show that even with an infinite amount of data the hypothesis that the data has been generated by a non-monotonic function cannot be ruled out. An application concerning the recovery of the excess demand function from a sequence of price observations from the tatonnement process is also given.I would like to thank Professors Bent Christensen and Mukul Majumdar for valuable discussions and an anonymous referee for helpful comments. Financial support from SSHRC and Quebec's Fonds FCAR is gratefully acknowledged.