European influence and economic development

The development accounting literature identifies political institutions as fundamental development determinants. Forms of government or executive constraints are thought to shape economic institutions (e.g., property rights) that provide necessary incentives for economic growth. One strand of the literature suggests that European influence is a crucial economic development determinant, presumably through the adoption of European institutions. But how exactly did European influence in the distant past induce positive economic outcomes today? Previous approaches rely on “language,” “settler mortality,” “legal origins” or the “number of European settlers” as indirect proxies of European influence. We propose a direct and quantifiable mechanism: the adoption of European constitutional features. We construct a dataset of all constitutional dimensions from 1800–2008 for all countries and find that nations experience growth accelerations after adopting features of European constitutions. The growth effects are influenced (negatively) by periods of political turmoil, but they are independent of colonial backgrounds. These results show how European influence may have fostered growth, and they imply that countries were able to overcome adverse initial conditions over the last 200 years by adopting European constitutional features. Our constitutional dataset is sufficiently detailed to identify the specific dimensions of European constitutions that matter most for development: legislative rules and specific provisions that curtail executive powers.     

Conscious Parallelism in Asymmetric Oligopoly

Conscious parallelism refers to collusive forms of parallel pricing in oligopoly. In this paper, four distinct pricing methods which all impose some form of parallel conduct are analysed. The pricing methods maximize joint profits if, and only if, firms are symmetric. With asymmetries in cost, total gains from collusion are reduced and absolute and relative collusive gains differ between firms. For many collusive optima, low‐cost firms have only little to gain from conscious parallelism. This is particularly the case when the degree of product homogeneity is high.     

Zu neuen Gerichtsentscheidungen über die Verstärkung des Verbraucherschutzes

Zusammenfassung Der Beitrag zeigt an zwei Beispielen aus der deutschen Gerichtspraxis, daß Verbraucherschutz nicht nur ein Anliegen an die Gesetzgebung beinhaltet. Vielmehr können Gerichte durch das ihnen vorliegende Fallmaterial verbraucherpolitisch wirken und damit die Rechtsstellung des Verbrauchers verbessern.

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Two court rulings strengthening the protection of consumers

The author describes two examples of consumer protection by German courts. It is suggested that the improvement of the consumer's position is not only a task for the legislator, but is also the result of effective law handling in courts.

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Theo Rasehorn ist Vorsitzender Richter am Oberlandesgericht Frankfurt, 6000 Frankfurt/Main.     

Best Practices for New Product Pricing: Impact on Market Performance and Price Level under Different Conditions

To date, research on new product pricing has predominantly been approached as a choice between market skimming and penetration pricing. Despite calls for research that addresses other complexities in new product pricing, empirical research responding to these calls remains scarce. This paper examines three managerial price‐setting practices for new products, i.e., value‐informed, competition‐informed, and cost‐informed pricing. By engaging in these practices, managers can develop and compare quantifications in order to attain an introduction price for the product. The authors draw on consumer price perception literature, Monroe's pricing discretion model, and numerical cognition literature to develop hypotheses about the impact of price‐setting practices on new product market performance and price level. By studying the effects on market performance and price level, the paper provides insights that may help explain the growth of new products and address the problems of underpricing. The hypotheses are tested in a management survey of 144 production and service companies. The results indicate which pricing practices are superior for the achievement of either higher market performance or higher prices in specific product and market conditions. Whereas value‐informed pricing has an unambiguous positive impact on relative price level and market performance, the results also suggest that in many cases engaging in value‐informed pricing is not enough. The effects of cost‐informed and competition‐informed pricing may differ depending upon the objective (market performance or higher prices), product conditions (product advantage and relative product costs), and market condition (competitive intensity). Engaging in inappropriate pricing practices leads to a decline in new product performance. Moreover, bad pricing practices make the positive effect of product advantage on the outcome variables disappear. The latter finding suggests that companies can jeopardize their efforts and investments in the new product development process if they engage in the wrong price‐setting practices. The findings imply that managers should consider different factors in new product pricing. First, when launching a new product, they should determine their explicit pricing objective, either stressing market performance or a higher price level. To determine the most appropriate pricing practices, however, they should next assess their situation in terms of product advantage, relative product costs, and competitive intensity. Together with the pricing objective, these conditions determine the best pricing practice. On a higher level, the findings imply that companies should invest in knowledge development in order to engage in the appropriate pricing practices for each product launch.     

Acquisition Pattern Analysis for Relationship Marketing: A Conceptual and Methodological Redefinition

Traditionally, relationship marketing focuses upon the interaction between suppliers and consumers. In this article, the authors propose that relationship marketing cannot ignore another type of (long-term) interaction: the one between consumers and products. Both types of interaction should be taken into account when assessing the nature and the quality of the relationship. The relevant literature on consumer–product interactions is limited. Existing theoretical concepts, including brand loyalty, cannot adequately cover the full notion of consumer–product interactions. Acquisition pattern analysis (APA) seems capable of providing an alternative. It provides an insight in the structure of product sets and acquisition orders. However, the available techniques for APA cause confusion by their emphasis on either the structure or the order of product acquisitions. The authors propose a methodological improvement, which has analytical implications as well. A study on purchases of financial products demonstrates the proposed alternative approach, and managerial implications are discussed.     

How advertising in offline media drives reach of and engagement with brands on Facebook

ABSTRACT

Research investigating the drivers of consumers’ engagement with brands on social media is proliferating. However, little is known about how advertising outside social media drives engagement with brands on social media. This study aims to explore the relation between advertising spend in different offline media (TV, radio, newspapers, magazines, out of home), and reach of and engagement with brand pages on Facebook. The study uses a unique real-life data-set containing information about the Facebook pages of 45 brands for approximately three years combined with Nielsen Advertising Spend data. Results showed that while advertising in offline media influenced organic and viral reach, the number of page likes was directly influenced by advertising on Facebook only. It can be concluded that offline advertising is relevant in driving consumers’ online brand engagement; however, there is a unique set of drivers for organic reach, viral reach and likes.     

The contribution of scenario analysis to the front-end of new product development

The front-end of new product development involves the identification and analysis of product or service opportunities, idea generation, and the selection of new product and service concepts. It is often referred to as non-routine, dynamic, and highly uncertain. Authors have made attempts to improve the manageability of this phase by proposing several methods and techniques. This paper explores the possible contribution of scenario analysis to increase the quality and effectiveness of the front-end of new product development process by linking a set of functions of scenario analysis as is recognized in the literature as possible solutions to various front-end problems. Two case studies are used to explore if and how the scenario analysis functions contribute to the front-end of new product development process in an empirical setting.     

Trade creation and diversion revisited: Accounting for model uncertainty and natural trading partner effects

The effect of preferential trade agreements (PTAs) on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical PTA literature. The existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the ‘correct’ set of explanatory variables that ought to be included in the analysis. To account for the model uncertainty that surrounds the validity of the competing PTA theories, we introduce Bayesian model averaging (BMA) to the PTA literature. Statistical theory shows that BMA successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error, and by generating predictive distributions with optimal predictive performance. Once model uncertainty is addressed as part of the empirical strategy, we find strong evidence of trade creation, trade diversion, and open bloc effects. Our results are robust to a range of alternative empirical specifications proposed by the recent PTA literature. Copyright © 2010 John Wiley & Sons, Ltd.