Licensing and  Price Competition in Tied-Goods Markets: An Application to the Single-Serve Coffee System Industry

Qin, Marco Shaojun; Vitorino, Maria Ana

doi:10.2139/ssrn.2823221

Cited by 3 publications

(4 citation statements)

References 35 publications

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“…The own‐price elasticity estimates of traditional auto‐drip brew coffee products in this paper tend to be slightly smaller in magnitude compared to analogous estimates obtained in some studies: Krishnamurthi and Raj (1991) (3.6–8.2); Broda and Weinstein (2006) (3.1); Foster et al (2008) (3.65); Villas‐Boas (2007b) (5.6–6.8); and Nakamura and Zerom (2010) (3.96). Chintagunta et al (2018) provide an own‐price elasticity estimate of 3.6 in absolute magnitude for single‐cup brew coffee products in coffee markets in Portugal; and Ellickson et al (2018) report their own‐price elasticity estimate for single‐cup products of 2.89 in absolute value. Both estimates are within the range of our estimated own‐price elasticities for single‐cup coffee products in US markets.…”

Section: Resultsmentioning

confidence: 99%

“…Last, our paper is also related to the coffee literature, among which only a few have studied the relatively new single-cup coffee segment, for example, Chintagunta et al (2018), Kong et al (2016), Lin (2017), and Ellickson et al (2018). Different from previous coffee papers either on auto-drip (ground) coffee or the single-cup system, we examine the interrelationship of the two segments.…”

Section: Related Literaturementioning

confidence: 99%

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

Gayle

Lin

2022

Economics Manag Strategy

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The introduction of new products has always been an important source of economic development and improvement in consumer welfare. 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. The demand estimates suggest that consumers' relative preference and willingness-to-pay for the new product grew substantially over the sample periods. The analysis reveals the extent to which the introduction and growing presence of the new product simultaneously expanded the relevant market and cannibalized the sales of preexisting substitute products (traditional auto-drip brew coffee products). Furthermore, we quantify the annually expanding welfare gains of the average consumer attributable to the new product.

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Section: Resultsmentioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

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

Gayle

Lin

2022

Economics Manag Strategy

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“…The problem is computationally demanding as it requires the numerical solution to a dynamic programming problem with cardinality K N . 10 One possible solution to the curse of dimensionality is to impose restrictions on the primitives, (a it ; s) and q(s 0 ; s; ). Anonymity and symmetry allow the problem to be formulated in a smaller set of industry states (Ericson and Pakes, 1995;Doraszelski and Satterthwaite, 2010).…”

Section: Dimensionality Concernsmentioning

confidence: 99%

“…where M is the market size. The market share of hotel i ( i ) is a function of (s i ; s i ) and solves the system of equations [10] and [11]. The industry transition when …rm i chooses action a i , and the competitors adopt strategies i is q(s 0 ; s; a i; i ).…”

Section: Estimatormentioning

confidence: 99%

An Aggregation Method for Large-Scale Dynamic Games

Santos¹

2020

SSRN Journal

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It is a well known fact that many dynamic games are subject to the curse of dimensionality, limiting the ability to use them in the study of real-world problems. I propose a new method to solve complex large-scale dynamic games using aggregation as an approximate solution. I obtain two fundamental characterization results. First, approximations with small within-state variation in the primitives have a smaller maximum error bound. I provide numerical results which compare the exact errors and the bound. Second, I …nd that for monotone games, order preserving aggregation is a necessary condition of any optimal aggregation. I suggest using quantiles as a straightforward implementation of an order preserving aggregation architecture for industry distributions. I conclude with an illustration, by solving and estimating a stylized dynamic reputation game for the hotel industry. Simulation results show maximal errors between the exact and approximated solutions below 6%, with average errors below 1%.

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The Welfare Effect of Product Incompatibility in Complementary Goods Markets

2018

SSRN Journal

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Licensing and Price Competition in Tied-Goods Markets: An Application to the Single-Serve Coffee System Industry

Cited by 3 publications

References 35 publications

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

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

An Aggregation Method for Large-Scale Dynamic Games

The Welfare Effect of Product Incompatibility in Complementary Goods Markets

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