Ambarish Chandra

Consumer Search and Dynamic Price Dispersion: An Application to Gasoline Markets

This paper studies the role of imperfect information in explaining price dispersion. We use a new panel dataset on the U.S. retail gasoline industry, and propose a new test of temporal price dispersion to establish the importance of consumer search. We show that price rankings vary significantly over time; however, they are more stable among stations at the same street intersection. We establish the equilibrium relationships between price dispersion and key variables from consumer search models. Price dispersion increases with the number of firms in the market, decreases with the production cost and increases with search costs.

Targeted Advertising in Magazine Markets and the Advent of the Internet

This paper examines how the ability of traditional media firms to engage in targeted advertising has changed with the advent of the Internet. We find that the premium for reaching a homogeneous audience increases for magazines that have a companion website, as well as for those whose readers are more likely to be online. This indicates a complementarity between offline and online channels with respect to targeted advertising. We hypothesize that this result is driven by multihoming consumers who enhance the value of targeted advertising, in contrast to the usual assumption that multiple advertising messages are redundant. This paper was accepted by Pradeep Chintagunta, marketing.

The Economics of Cross-Border Travel

We model the decision to travel across an international border as a trade-off between benefits derived from buying a range of products at lower prices and the costs of travel. We estimate the model using microdata on Canada–United States travel. Price differences motivate cross-border travel; a 10% home appreciation raises the propensity to cross by 8% to 26%. The larger elasticity arises when the home currency is strong, a result predicted by the model. Distance to the border strongly inhibits crossings, with an implied cost of 87 cents per mile. Geographic differences can partially explain why American travel is less exchange rate responsive.

Who Loses when Prices are Negotiated? An Analysis of the New Car Market†

We establish that there are large and persistent differences in final transaction prices for identical new cars, and that demographic characteristics explain at least 20% of the observed variation. Older consumers perform progressively worse in negotiations, and the age premium is greater for women than for men. Our results suggest that the complex nature of vehicle transactions leads to price dispersion in this market, and that the worst performing groups—older women—have the lowest rates of market participation. We conjecture that the results are driven by the sharp increases in womens education and labor force participation in recent decades.

Newspapers and Magazines

We review the Economics literature on Newspapers and Magazines. Our emphasis is on the newspaper industry, especially in the United States, given that this has been the focus of existing research. We first discuss the structure of print media markets, describing the rise in the number of daily newspapers during the early 20th century and then the steady decline since the 1940s. We discuss print media in the context of two-sided markets, noting that empirical papers on the newspaper industry were some of the earliest studies to use the techniques of two-sided market estimation. We then review the research on advertising in print media, particularly the question of whether readers value print advertising as a good or a bad. We summarize the research on antitrust-related issues in newspaper markets, including mergers, Joint Operating Agreements and vertical price restrictions. We then review recent research on how print media have been affected by the growth of the Internet. Finally, we offer suggestions for future research and provide thoughts on the future of this industry.

Who Loses when Prices are Negotiated? An Analysis of the New Car Market: WHO LOSES WHEN PRICES ARE NEGOTIATED?

We establish that there are large and persistent differences in final transaction prices for identical new cars, and that demographic characteristics explain at least 20% of the observed variation. Older consumers perform progressively worse in negotiations, and the age premium is greater for women than for men. Our results suggest that the complex nature of vehicle transactions leads to price dispersion in this market, and that the worst performing groups—older women—have the lowest rates of market participation. We conjecture that the results are driven by the sharp increases in womens education and labor force participation in recent decades.

How Does Advertising Depend on Competition? Evidence from U.S. Brewing

The relationship between market structure and advertising has been extensively studied, but has generated sharply opposing theoretical predictions, as well as inconclusive empirical findings, likely because of severe endogeneity concerns. We exploit the 2008 merger of Miller and Coors in the U.S. brewing industry to examine how changes in local concentration affect firms’ advertising behavior. Well-established regional preferences over beer brands, and the sharp increase in concentration from the merger, make this an excellent setting to analyze this question. We find a significant positive effect of local market concentration on advertising expenditures: a 100-point increase in the Herfindahl–Hirschmann Index measure of concentration increases advertising per capita by about 5%. Our findings shed light on how and when firms choose to deploy advertising. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2889. This paper was accepted by Eric Anderson, marketing.