Foreign investments in Russia’s electric power industry

Foreign investments in Russia??s electric power industry and their role in the institutional and regulatory reorganization of its reformation are analyzed in the article. A comparison of the revenue efficiency of electric power generation companies on the Russian and European markets is made.     

Evaluating horizontal mergers in the presence of price promotions

Quantitative Marketing and Economics - In this paper, I investigate the impact of a horizontal merger between firms that use price promotions. I find that after the merger, the merged firms...     

Choosing the Quality of the Fit between Complementary Products

In this paper, I examine how firms should position their complementary products. I assume that there are two competing firms, each producing two complementary products. Each firm decides whether to employ strategies that enhance the quality of the fit (the degree of complementarity) between its pair of complementary products before competing in prices. The consumers have heterogeneous tastes for the four possible bundles. They are willing to pay a price premium in order to purchase a bundle from the same firm if this firm chose to make such bundle more attractive. I find that increasing the degree of complementarity between a firm's complementary products intensifies price competition and often leads to smaller profits. Only when complementarity‐enhancing strategies significantly increase the demand for a firm's matching bundle, does the firm benefit from employing them. The highest profits for both firms are obtained when both firms do not employ complementarity‐enhancing strategies. Deteriorating the quality of the fit between one's own and a rival's complementary products is never profitable.     

Price promotions in emerging markets

How should price promotion strategies be modified in an emerging market (e.g., India, China) compared to those employed in developed markets (e.g., USA, Canada)? Specifically, how should the presence of middle-class consumers with limited ability to pay, prevalent in an emerging market, influence the depth and frequency of price promotions offered by competing firms? Lay intuition suggests that firms should promote more frequently and offer deeper discounts in emerging markets, in order to effectively sell to limited income, middle-class consumers. We construct a theoretical model that investigates the effect of the middle-class segment on firms' price promotion strategies. Contrary to lay intuition, our analysis reveals precisely the opposite results. First, price promotions offered in an emerging market (with middle-class consumers) are shallower than those offered in a developed market (without middle-class consumers). Second, relatively deep price promotions occur less frequently in an emerging market, compared to a developed market. These theoretical findings are consistent with the empirical evidence we gathered from the supermarkets in India and in Canada.     

Trade spends and profitability of promotions

This paper examines the prevalent mechanism of financing advertising and temporary price reductions through trade spend budgets. A manufacturer and a retailer interact for a number of periods with a plan to hold a sale in the last period. During the nonpromotional periods, the retailer accumulates the funds in this budget in proportion to the size of its order from the manufacturer. In the sale period, the budget is used to finance the discount offered by the manufacturer and advertising. I find that the manufacturer drops its price in the sale period to increase the profitability of promotions for the retailer. To be able to sell more units during the sale period, the retailer needs to accumulate a larger trade spend. This is accomplished by setting a smaller mark-up over the manufacturer's price in the regular periods. The manufacturer takes advantage of the retailer's softer pricing by increasing its regular wholesale price. As long as such trade spends are used to finance advertising, the total profits of each firm increase. Using fixed trade spends, where the manufacturer allocates a fixed amount for the retailer, does not lead to an increase in profits.