Issue 3

Volume 31 JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY
Fall 2022

Market effects of new product introduction: Evidence from the brew-at-home coffee market

Philip G. Gayle and Ying Lin
With retail coffee data spanning 5 years after the single-cup brew coffee pods were introduced to grocery chains, this paper empirically studies the market effects of new product introduction in the brew-at-home coffee market. We use a structural model of demand and supply to capture the changes in consumers’ preference for this new product over time.

Dynamic monopoly and consumers profiling accuracy

Didier Laussel, Ngo Van Long, and Joana Resende
Using a Markov-perfect equilibrium model, we show that the use of customer data to practice intertemporal price discrimination will improve monopoly profit if and only if information precision is higher than a certain threshold level. This U-shaped relationship lends support to a popular view that knowledge is good only if it is sufficiently refined.

Platform price parity clauses and market segmentation

Joan Calzada, Ester Manna, and Andrea Mantovani
Price parity clauses (PPCs) are widely adopted by online platforms to force client sellers not to lower their prices elsewhere. We investigate under what conditions online travel agencies (OTAs) decide to apply PPCs, and how this affects hotels' listing decisions on OTAs.

Information accuracy and collusion

Stefano Colombo and Aldo Pignataro
In this study, we investigate firms' ability to collude when price discrimination based on the inherited market is possible, but the information accuracy about the inherited market is imperfect. We show that the level of information accuracy affects collusion sustainability nonmonotonically, according to the starting level of information and the consumers' reservation price. Moreover, we show that banning price discrimination might increase the sustainability of tacit collusion.

On the profitability of interfirm bundling in oligopolies

Sang-Hyun Kim and Jong-Hee Hahn
This paper examines the profitability of interfirm bundling among independent single-good producers in a two-dimensional Hotelling framework. We show that interfirm bundling tends to relax price competition by preventing consumers from mixing and matching (i.e., making it difficult to switch brands) and therefore is more profitable than separate sales, provided that firms are sufficiently symmetric.

Information technology and the spatial reorganization of firms

Youngho Kang and Jeongmeen Suh
This study investigates how the adoption of an enterprise resource planning (ERP) system affects firms' spatial organization. We first provide a conceptual framework that explains how a firm reallocates different types of labor across establishments in different locations by adopting an ERP system, to lower internal coordination costs. Guided by this framework, we empirically find that ERP adopters increase production activities in non-headquarter (HQ) establishments, while they decrease these activities in their HQ.

The local bias in equity crowdfunding: Behavioral anomaly or rational preference?

Lars Hornuf, Matthias Schmitt, and Eliza Stenzhorn
We use data on individual investment decisions to analyze whether investors in equity crowdfunding direct their investments to local firms and whether specific investor types can explain this behavior. We then examine whether investments exhibiting a local bias are more or less likely to fail. We show that investors exhibit a local bias, even when we control for those with personal ties to the entrepreneur.

Honest agents in a corrupt equilibrium

Alexander Henke, Fahad Khalil, and Jacques Lawarree
We present a principal–auditor–agent model with adverse selection where the agent can bribe the auditor and the auditor can extort the agent. We show that it is optimal to deter extortion but allow bribery, and we analyze the impact of honest agents in this setting.