Empirical research in selective communications

Selective communications are messages designed to be perceived differently by members of different market segments. This paper summarizes the results of an empirical study which suggests that codes may be highly effective selective messages which are perceived by interested consumers and not by others.     

Subject pool effects among the general population and students: a choice experiment example

Rising costs of conducting research coupled with limited budgets are forcing researchers to use samples of convenience. Students represent one such sample, but are students an appropriate population? The objective is to ascertain how students’ willingness to pay (WTP) differs from the general public’s WTP. Students and county residents are surveyed. Results suggest the study’s goal may determine if student responses are generalizable to the general population. The samples are similar in many characteristics, but WTP amounts vary. The student samples show some inconsistencies. If the goal is general behavioural inferences, the results provide support for the use of students. If the goal is to estimate specific WTPs for use in policy analysis, the use of students may not be advisable.     

Effects of the 2010 Horizontal Merger Guidelines on Merger Review: Based on Ten Years of Practical Experience

Review of Industrial Organization - We assess how the 2010 Merger Guidelines have been applied by agencies and courts. We conclude that:     

'Any schmuck can consume': a response

Murray Rothbard misunderstood what Mises meant by'consumer sovereignty'. But Rothbard fully understood how producer decisions are shaped by the desire to anticipate the preferences of consumers.     

Ethical Dimensioins of Advertising Executions

This paper suggests a framework for determining the ethicality of disguised and obtrusive advertising. While most discussions of advertising ethics deal with deception or fraud, the proposed framework is based on the way messages are presented to audiences. Suggestions for measurement and future research are given.     

Farmers’ performance and subject pool effect in decentralized bargaining markets

We report results from a decentralized bargaining market experiment conducted with farmers and students. Our results indicate that despite its bad reputation, performance is highly efficient (although not as efficient as the competitive equilibrium prediction). Farmers and students perform similarly regarding quantities, prices, and allocative efficiencies, but not regarding payoff allocations between buyers and sellers.     

Virtual Patent Extension by Cannibalization

We propose a model to explain the recent practice of pharmaceutical firms of introducing generic substitutes for their own branded products before their patents expire. By this early introduction, a branded product's provider seeks to establish a Stackelberg leadership role in the forthcoming generic substitute market. Along with the early introduction of the generic substitute for its branded product, the firm optimally raises the price of its branded product above its prior monopoly level. However, despite its Stackelberg leadership position in the subsequent generic substitute market, the firm's branded product's price declines for a sufficiently large number of entrants into that market. Consumers, who are assumed to be composed of a brand-loyal segment and a price-sensitive segment, are better off both before and after the branded product's patent expires as a result of the branded products' suppliers early introduction of generic substitutes. The branded products' suppliers are also better off but the generics' suppliers are not as a result of this practice. However, total producer profits are higher than they would be if the branded products' suppliers were not involved in supplying their own generic substitute.     

Managerial Compensation and Capital Structure

We investigate the interaction between financial structure and managerial compensation and show that risky debt affects both the probability of managerial replacement and the manager's wage if he is retained by the firm. Our model yields a rich set of predictions, including the following: (i) The market values of equity and debt decrease if the manager is replaced; moreover, the expected cash flow affirms that retain their managers exceeds that affirms that replace their managers, (ii) Managers affirms with risky debt outstanding are promised lower severance payments (golden parachutes) than managers affirms that do not have risky debt. (Hi) Controlling for firm's size, the leverage, managerial compensation, and cash flow of firms that retain their managers are positively correlated, (iv) Controlling for the firm's size, the probability of managerial turnover and firm value are negatively correlated, (v) Managerial pay-performance sensitivity is positively correlated with leverage, expected compensation, and expected cash flows.