Marketing and politics: Models, behavior, and policy implications

The American presidential election is one of the largest, most expensive, and most comprehensive marketing efforts. Despite this fact, marketing scholars have largely ignored this campaign, as well as thousands of others for congresspersons, senators, and governors. This article describes the growth of interest in research issues related to political marketing. This emerging research area lies at the crossroads of marketing and political science, but these fields have developed largely independent of one another with little cross-fertilization of ideas. We discuss recent theoretical, empirical, and behavioral work on political campaigns, integrating perspectives from marketing and political science. Our focus is on (1) the extent to which paradigms used in goods and services marketing carry over to the institutional setting of political campaigns, (2) what changes are necessary in models and methodology to understand issues in political marketing and voter behavior, and (3) how the special setting of politics may help us gain a better understanding of certain topics central to marketing such as advertising, branding, and social networks.     

Factors influencing wealth creation from mergers and acquisitions: A meta-analysis

This study analyzes the empirical literature concerning the influence of various factors on shareholder wealth creation in mergers and acquisitions using a multivariate framework. Overall, results indicate that while the target firm's shareholders gain significantly from mergers and acquisitions, those of the bidding firm do not. Findings also indicate that the use of stock financing has a significant impact on the wealth of both the target and bidding firms' shareholders. The presence of multiple bidders and the type of acquisition influence the bidders' return, while regulatory changes and tender offers influence the targets' returns. The paper also provides a comparison of our findings with that of previous narrative reviews and discusses their implications from the viewpoint of managers and researchers.     

Cournot competition in a differentiated oligopoly

This paper studies product-quantity equilibria in an oligopoly. Products are interpreted as “qualities” and each firm chooses a quality-quantity pair, simultaneously. It is well known that a pure-strategy equilibrium in product-price pairs does not exist in this model, but a pure-strategy equilibrium in product-quantity pairs exists. Furthermore, in an example widely studied in the literature, the equilibrium has nice asymptotic properties.     

Forum-Shopping and Personal Bankruptcy

The dramatic increase in U.S. personal bankruptcy filings of the last fifteen years has focused attention on the wide disparities between different states' personal bankruptcy exemptions. These differences have been criticized both on the grounds of equity and also because they provide an incentive to move to a state with a higher exemption before declaring bankruptcy, that is to forum-shop. This paper focuses on the latter of these objections. Using data from the Panel Study of Income Dynamics (PSID), we estimate a Nested Logit model of the household migration decision. Our econometric approach specifically avoids the problem of endogenously induced bankruptcy filings by examining the effect of filing propensity, rather than the actual event of filing, on the tendency to migrate to a higher exemption state. We conclude that while there is indeed evidence that considerations of bankruptcy laws do influence interstate migration, the actual effect is relatively modest. We estimate that, in any given year, roughly one percent of moves to higher-exemption states are motivated by considerations of differences in bankruptcy laws; by way of comparison, this is roughly comparable to the magnitude of recent estimates of welfare-induced migration. This suggests that the emphasis on differences in exemptions which has been a feature of recent attempts to reform the bankruptcy code is somewhat exaggerated.     

Characteristics and behavior of newly listed firms: Evidence from the Asia-Pacific region

We examine the size, profitability and delisting experience during 1980–1999 of new lists in the Pacific Basin countries. We also examine the impact of the legal environment on post-listing behavior. We find that new lists are more numerous in common law countries. They are smaller than seasoned firms, regardless of legal regime. New lists are more profitable in civil law countries, but this is due to the high profitability of Japanese new lists. Asian new lists have lower rates of delisting compared to U.S. firms. The delisting frequency of seasoned firms exceeds that of new lists for our sample countries.     

Advertising Spending and Quality for Services: The Role of Capacity

In this paper we explore the relations among advertising spending, capacity and quality for services. Data from a sample of New York City restaurants show that mid-quality restaurants spend more on advertising than either high quality or low quality ones, contradicting the usual Nelson-type prediction that advertising spending increases with quality. Also, controlling for quality, restaurants with larger capacities advertise more. We present a model of services to explain these observations. The key features of the model are: (1) capacity constraints, (2) uncertain demand, (3) the presence of both informed and uninformed consumers, and (4) a technological link between capacity and quality. We argue that for services, advertising not only informs consumers, but it also can improve capacity utilization. Given this dual role, advertising is more valuable to firms with larger capacities and higher price-cost margins. The variation of these two elements with quality determines the advertising-quality relation.     

An alternative approach to discriminating multivariate populations and its applications to marketing research

A new method for discriminating among multivariate populations, called the Hausdorff procedure, is introduced to the marketing literature. Rules for classification are defined and a limited simulation study is conducted. For the simulation, both the level of collinearity among the discriminating variables and the level of overlap among the populations are varied. The results indicate that this new procedure is particularly suitable when there is either a high degree of collinearity among the predictor variables or considerable overlap of the populations being investigated. The Hausdorff procedure is also applied to two sets of consumer data. In each instance, it is found to be superior to linear discriminant analysis with respect to the percentage of correct classifications.     

Incorporating Behavioral Anomalies in Strategic Models

Behavioral decision researchers have documented a number of anomalies that seem to run counter to established theories of consumer behavior from microeconomics that are often at the core of analytical models in marketing. A natural question therefore is how equilibrium behavior and strategies would change if models were to incorporate these anomalies in a consistent way. In this paper we identify several important and generalizable anomalies that modelers may want to incorporate in their models. We briefly discuss each phenomenon, identify a key unresolved issue and outline a research agenda to be pursued.     

Managing Channel Profits: The Role of Managerial Incentives

The existing literature has examined how manufacturers can enhance profits by employing specific channel structures and channel coordination mechanisms. In this paper, we examine the implications of strategically designed managerial incentives for channel performance in a duopoly. We first analyze how equilibrium outcomes (especially manufacturer profits) are altered when the manufacturers provide their channel managers with strategically designed incentives. Following that, we examine how optimal channel structure decisions are altered when manufacturers provide their managers with strategic incentives, i.e., we examine how strategic incentives moderate optimal channel structure decisions. In contrast with the existing literature, we find that an asymmetric channel structure with one manufacturer employing a profit-maximizing retailer and the other integrated manufacturer providing strategic incentives for the channel manager in charge of pricing, is an equilibrium outcome under certain conditions. We then compare how the implications of strategic incentives differ from those of channel structure decisions and channel coordination initiatives, and discuss when and why strategic incentives yield superior outcomes from the manufacturer’s perspective. Our results shed light on the sparsely researched role of managerial incentives in the channel context.