Advertising in Vertical Relationships: An Equilibrium Model of the Automobile Industry

Murry, Charles

doi:10.2139/ssrn.2549247

Cited by 8 publications

(4 citation statements)

References 34 publications

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“…According to the results the profit margin of outsource base footwear and apparel corporations have lower profit margin than vertically integrated companies because the intial cost of vertically integrated firms is higher as compared to outsourcing firms but in long term outsourcing footwear and apparel corporations have high cost of transaction that declines the profit margin. The vertically integrated companies reduces the hold up problem that leads to reduction in cost and generate higher profit margin (Murry, 2015). Zara the flagship of Inditex companies and vertically integrated has achieved lower cost by declining the holdup problem in the competitive market (Ferdows, Lewis, & Machuca, 2005).…”

Section: Discussionmentioning

confidence: 99%

“…Vertically integrated firm can double the marginalization in case of adopting the franchises. It permits the single vertically integrated corporation to compete domestically and internationally in term of brand competition against its competitor and earn higher amount of revenue (Murry, 2015). The removal of hold up is achieved that leads to the reduction of markdown (Liu, 2016).…”

Section: Vertical Integration Strategymentioning

confidence: 99%

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The Comparative Financial Performance of Outsourcing and Vertically Integrated Corporations

Khudadad¹,

Tahir²,

Jan³

2018

EAJBM

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Purpose -The purpose of this study is to analyze the comparative financial performance of outsourcing and vertically integrated corporations from Footwear and Apparel industry. Research design, data, and methodology -Secondary data is collected from the published audited annual reports of the footwear and apparel corporations listed on stock exchanges globally. In the current study, 40 footwear firms have been opted that include 20 vertically integrated and 20 outsourcing firms. The sample is distributed into two groups based on threshold up-to 50 percent respectively outsourcing and vertically integrated companies. Sample independent t-test is applied to compare the financial performance of outsourcing and vertically integrated firms. Results -Based on the investigation of 10 years' data of financial ratio, the results of the study show that there is significant difference between outsourcing and vertical integration strategy on return on assets, return on equity while insignificant difference has found with profit margin. Conclusions -The findings of the current study indicates that there is significant difference between the financial performance of outsourcing and vertically integrated firms in terms of return on asset, return on equity and insignificant difference in terms of profit margin.

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Section: Discussionmentioning

confidence: 99%

Section: Vertical Integration Strategymentioning

confidence: 99%

The Comparative Financial Performance of Outsourcing and Vertically Integrated Corporations

Khudadad¹,

Tahir²,

Jan³

2018

EAJBM

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“…It is then virtually impossible to observe the transaction prices for all products within each location. A similar problem is likely to arise if there are many products available, as, again, in the automobile market (see, e.g., Langer, 2016;Allcott and Wozny, 2014;Murry, 2017, for papers relying on such data in this market). If we do not observe all the transaction prices (p d j ) d=1,...,n D corresponding to product j, but at least one price p d j j for each j, then we can use p j = p d j j and apply our methodology since Assumption 2 holds.…”

Section: Identifying Assumptionsmentioning

confidence: 99%

Automobile Prices in Market Equilibrium with Unobserved Price Discrimination

Durrmeyer

Février

2018

The Review of Economic Studies

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In markets where sellers are able to price discriminate, individuals pay different prices that may be unobserved by the econometrician. This article considers the structural estimation of a demand and supply model of differentiated products with such price discrimination and limited information on prices taking the form of, e.g., observing list prices from catalogues or average prices. Within this framework, identification is achieved not only with usual moment conditions on the demand side, but also through supply-side restrictions. The model can be estimated by GMM using a nested fixed point algorithm that extends the usual contraction mapping algorithm to our setting. We apply our methodology to estimate the demand and supply in the French new automobile market. Our results suggest that discounting arising from price discrimination is important. The average discount is estimated to be 9.6%, with large variation depending on buyers’ characteristics and cars’ specifications. Our results are consistent with other evidence on transaction prices in France.

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“…In industries where advertising spillovers contain information about the promoted product, spillovers can result in free-riding of competitors (Shapiro, forthcoming). 17 My model is similar to Murry (2015) for automobile demand, Nevo (2001) for cereals, or Chintagunta (2002) for analgesics. Shapiro (forthcoming) and Dubois et al (2014) show theoretical dynamic considerations.…”

Section: Pharmaceutical Demandmentioning

confidence: 99%

Umbrella Branding in Pharmaceutical Markets

Suppliet

2017

SSRN Journal

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Umbrella branding is a marketing practice whereby multi-product rms leverage their reputation across dierent product categories. This paper investigates how advertising in the market of over-the-counter (OTC) drugs aects the decision to buy prescription drugs from a promoted brand name. I exploit specic characteristics of market regulation in Germany to identify the eect of advertising and nd positive eects of umbrella branding on sales of prescription drugs. Umbrella branding results in market expansion, particularly for generic rms which invest in OTC drug advertising. If the eect leads to more consumers of generic substitutes or to more patients in undertreated therapeutic areas, market expansion can have a positive eect on welfare.

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Advertising in Vertical Relationships: An Equilibrium Model of the Automobile Industry

Cited by 8 publications

References 34 publications

The Comparative Financial Performance of Outsourcing and Vertically Integrated Corporations

The Comparative Financial Performance of Outsourcing and Vertically Integrated Corporations

Automobile Prices in Market Equilibrium with Unobserved Price Discrimination

Umbrella Branding in Pharmaceutical Markets

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