Knowledge that Transforms

We show that a horizontal merger can have differential price effects on customer segments depending on their supplier switching costs.

We propose a methodology that estimates the composition of separable demand groups using retail scanner data.

This study examines the effects of recreational cannabis legalization on adults versus youth and on the alcohol and tobacco industries.

This paper shows that quality information disclosure in the healthcare industry can have a negative impact on positive assortative matching between patients and healthcare providers.

Choice-based conjoint (CBC) studies have begun to rely on simulators to forecast equilibrium prices for pricing, strategic product positioning, and patent/copyright valuations. Whereas CBC research has long focused on the accuracy of estimated relative partworths of attribute levels, predicted equilibrium prices and strategic positioning are surprisingly and dramatically dependent on scale: the magnitude of the partworths (including the price coefficient) relative to the magnitude of the error term. Although the impact of scale on the ability to estimate heterogeneous partworths is well known, neither the literature nor current practice address the sensitivity of pricing and positioning to scale. This sensitivity is important because (estimated) scale depends on seemingly innocuous market-research decisions such as whether attributes are described by text or by realistic images. We demonstrate the strategic implications of scale using a stylized model in which heterogeneity is modeled explicitly. If a firm shirks on the quality of a CBC study and acts on incorrectly observed scale, a follower, but not an innovator, can make costly strategic errors. Externally valid estimates of scale are extremely important. We demonstrate empirically that image realism and incentive alignment affect scale sufficiently to change strategic decisions and affect patent/copyright valuations by hundreds of millions of dollars.

We assess the introduction of cigarette plain packaging in Australia, finding a 7.5% sales decline and changes across quality segments.

We investigate the relationship between product placement in television programs and the volume of social media activity and website traffic for the featured brand.