Vertical Differentiation with Variety-Seeking Consumers

Zeithammer, Robert; Thomadsen, Raphael

doi:10.1287/mnsc.1120.1585

Cited by 43 publications

(16 citation statements)

References 17 publications

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“…Nevertheless, we still find a medium effect of LN_NUMRES on RANGE under horizontal differentiation. This might be explained by idiosyncratic quality differences pertaining to different Ethnic Restaurant types and by theoretical findings of Zeithammer and Thomadsen (2013), who find that under certain conditions, two horizontally differentiated restaurants also differentiate vertically. In summary, comparing the coefficients from Table 6 (horizontal case) with those from Tables 4 and 5 (vertical case), H3 is supported.…”

Section: The Effect Of Horizontal Differentiationmentioning

confidence: 99%

Crowd-Driven Competitive Intelligence: Understanding the Relationship Between Local Market Competition and Online Rating Distributions

Gutt

Herrmann²,

Rahman

2019

Information Systems Research

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In this paper, we analyze how changes in local market structure affect the properties of a market's mean rating distribution. To this end, we combine demographic, socioeconomic, and Yelp restaurant review data for 372 isolated markets in the United States. Our empirical estimates demonstrate that an increase in overall competitionmeasured as total number of businesses in a marketleads to a broader range and to a decrease in the average of a market's mean rating distribution. The implication is that a larger market has proportionately more lower rated restaurants, whereas higher rated restaurants have relatively fewer comparable substitutes and face less competition in such a market. These effects are particularly pronounced when the analysis is limited to specific cuisine types where vertical differentiation is more natural or when we control for city-specific unobserved heterogeneity. Our findings highlight that practitioners and scholars using online mean ratings of businesses from disparate markets should account for the local market structure to judiciously analyze the relative market power of a business.

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Section: The Effect Of Horizontal Differentiationmentioning

confidence: 99%

Crowd-Driven Competitive Intelligence: Understanding the Relationship Between Local Market Competition and Online Rating Distributions

Gutt

Herrmann²,

Rahman

2019

Information Systems Research

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“…Moreover, assume that C(q) is continuous, increasing and convex, which can be thought of as having increasingly more expensive production capacity or input (e.g., supplied materials). Such an assumption is commonly used in economics and marketing literatures (e.g., Kalai et al 1992;Porteus 2002, Ha et al 2011Laffont and Mortimort 2002;Zeithammer and Thomadsen 2013). It is supported by empirical evidence in industries such as petroleum refining (Griffin 1972) and auto-making (Mollick 2004).…”

Section: Problem Formulationmentioning

confidence: 91%

Regulating a firm with bilateral unknown demands

Feng

Lan

2019

J. of Data, Inf. and Manag.

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We consider the impact of bilateral unknown information about the market capacity on the optimal regulatory policies in a regulation problem. We first analyze how to solve such problem when the market capacity is full information, a case which allows us to obtain most of key insights from regulatory models. We then extend the analysis to the bilateral unknown information case. We do this by assuming that neither the regulator nor the firm knows exactly the true market capacity, but they can make respective estimates about it, the same or different. The results show that when the regulator and the firm make the same estimate about the true market capacity, the optimal price is distorted downwards from that under full information, and the transfer payment is distorted upwards from that under full information, but bilateral unknown information does not necessarily result in the distortion of the firm's output. When the regulator and the firm make the different estimates about the true market capacity, and if the firm's estimate is more optimistic than the regulator's, the optimal price and output are more than those under the case that they have the same estimate. Contrary to this case, if the firm's estimate is more pessimistic than the regulator's, the optimal price and output are less than those under the case that they have the same estimate.

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“…There are two other research streams indirectly related to our research. The first one uses the vertical product differentiation framework to consider entry deterrence problems and quality choice strategies in operations domain (see, for example, Vandenbosch and Weinberg [23]; Desai [24]; Noh and Moschini [25]; Lauga and Ofek [26]; Zeithammer and Thomadsen [27]). In this stream, products quality can be designed in the process of production to examine how the incumbent's choice of product quality depends on the threat strategies of entrant.…”

Section: Relevant Literaturementioning

confidence: 99%

Should a Manufacturer Encroach on Its Retailer’s Operations with Quality Differentiated Products?

Chai

Chen

Huang

et al. 2017

Discrete Dynamics in Nature and Society

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Despite the fact that manufacturers are progressively encroaching into the retail market by selling products that differ in quality from the products that are already on the market, this issue has received little attention in the literature on dual-channel supply chains. We fill this gap by first considering that a manufacturer sells higher- (lower-) quality products through its own direct channel, whereas all lower- (higher-) quality products are distributed by an independent retailer, and then comparing our equilibrium outcomes with those in the literature of the manufacturer who distributes homogeneous products through both channels. Our results show that, compared to selling lower-quality products directly or offering homogeneous products through both channels, an effort by the manufacturer that is too aggressive in its attempt to encroach on the retail market (i.e., selling higher-quality products directly) not only decreases the retailer’s profits but also reduces the manufacturer’s own profitability. Furthermore, we find that, compared with offering homogeneous products through both channels, selling lower-quality products directly is always beneficial for the retailer but hurts consumers.

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Vertical Differentiation with Variety-Seeking Consumers

Cited by 43 publications

References 17 publications

Crowd-Driven Competitive Intelligence: Understanding the Relationship Between Local Market Competition and Online Rating Distributions

Crowd-Driven Competitive Intelligence: Understanding the Relationship Between Local Market Competition and Online Rating Distributions

Regulating a firm with bilateral unknown demands

Should a Manufacturer Encroach on Its Retailer’s Operations with Quality Differentiated Products?

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