Welfare variations and the comparative statics of demand

By employing order-theoretic comparative statics, we provide necessary and sufficient conditions on the direct utility function (alternatively, on the indirect utility function) to guarantee that the compensating and equivalent variations are monotonically increasing in income. We also show that these conditions are sufficient to guarantee normal demand. Our results do not depend on the smoothness or strict quasiconcavity of the utility function, and can be extended to a setting with non-linear prices.     

An existence theorem for Cournot–Walras equilibria in a monopolistically competitive economy

We establish an existence theorem for Cournot–Walras equilibria in a monopolistically competitive economy. Instead of the traditional approach which depends on Kakutani’s fixed point theorem, we employ the theories of aggregative games and best reply potential games. We show that, if there exists a representative consumer, under some conditions on preferences and production technologies, the profit maximization game is a (pseudo) best reply potential game. Hence, the existence of the equilibria is proved independently of the well known convex-valued assumption on the best responses. Although our assumptions result in the additive separability on a utility function of a representative consumer, the existence of increasing returns and indivisible productions can be allowed. In our model, it is shown that the game played by firms exhibits strategic substitutes whether the products of firms are substitutes or complements, and this plays an important role for the existence of the equilibria.     

Impact of “High Quality,Low Price” Appeal on Consumer Evaluations

Marketers frequently adopt a “high quality, low price” appeal in advertisements. However, the price–quality inference theory implies that this contextual appeal may not be well-accepted by consumers because it contains two contradictory cues: high quality and low price. This article investigates how consumers evaluate this appeal through two laboratory experiments. Study 1 shows that the appeal leads to favorable price perceptions and purchase intentions when the product price is high; it leads to high quality perceptions when the price is low. Study 2 shows that these effects are salient when consumers have a weak price–quality schema or a low need-for-cognition.     

Entry Deterrence in a Unionized Oligopoly

We investigate wage determination between an incumbent firm and its labour union under threat from another firm entering its product market. In equilibrium, it may be optimal for a labour union of the incumbent firm to lower its wage demand. This may make it possible for the incumbent firm to maintain a higher employment level, in that the lower wages can help the firm deter the entry of a rival firm. This will yield a higher profit for the incumbent firm and a lower utility level for the labour union compared with those in an equilibrium with no threat of entry.
JEL Classification Numbers: J51, L10     

Analyzing Price Premiums for Foods in Japan: Measuring Consumers' Willingness to Pay for Quality-Related Attributes

This study attempts to elucidate the characteristics of price premiums for food products from the consumers' viewpoint. After conducting a survey, consumers' willingness to pay (WTP) for 13 important food elements is analyzed for 10 food categories. The main findings were first, the categories that can easiest achieve a price premium are fruit and vegetables and meat and fish with the hardest being snacks and sweets and frozen foods. Second, the food element most related to price premiums is safety while the least related is convenience. Finally, an appropriate level for price premiums for food products is generally about 20%.     

Consumer expectations concerning timing and depth of the next deal

In this article, deal expectation is defined as the expected length of time to the next deal that is similar to or better than the current deal (ETND). It is argued that ETND influences price evaluations in addition to any effect of the perceived difference between the retail price and the consumer's internal reference price (PPD). Two studies were conducted by manipulating dealing patterns over time. Results showed that ETND was affected by past dealing patterns and by evaluation of the current deal relative to the past. ETND becomes more important when the current deal is rather unexpected than when it is the same as or similar to past dealing patterns in terms of its discount depth. Also, ETND influenced price evaluations as well as PPD. © 2005 Wiley Periodicals, Inc.