Masakazu Ishihara

Measuring the Informative and Persuasive Roles of Detailing on Prescribing Decisions

In the pharmaceutical industry, measuring the importance of informative and persuasive roles of detailing is crucial for both drug manufacturers and policy makers. However, little progress has been made in disentangling these two roles of detailing in empirical research. In this paper, we provide a new identification strategy to address this problem. Our key identification assumptions are that the informative component of detailing is chemical specific and the persuasive component is brand specific. Our strategy is to focus on markets where some drug manufacturers engage in a comarketing agreement, under which two or more companies market the same chemical using their own brand names. With our identification assumptions, the variation in the relative market shares of these two brands, together with their brand specific detailing efforts, would allow us to measure the persuasive component of detailing. The variation in the market shares of chemicals, and the detailing efforts summed across brands made of the same chemical, would allow us to measure the informative component of detailing. Using the data for angiotensin-converting enzyme inhibitor with diuretic in Canada, we find evidence that our identification strategy can help disentangle these two effects. Although both effects are statistically significant, we find that the persuasive function of detailing plays a very minor role in determining the demand at the chemical level---the informative role of detailing is mainly responsible for the diffusion patterns of chemicals. In contrast, the persuasive role of detailing plays a crucial role in determining the demand for brands that comarket the same chemical. This paper was accepted by Pradeep Chintagunta, marketing.

Overcoming the Illegitimacy Discount: Cultural Entrepreneurship in the US Feature Film Industry

How can organizations spanning institutionalized categories mitigate against the possibility of reduced attention by audiences? While there has been a good deal of research on the illegitimacy discount of category spanning, scant attention has been paid to how organizations might strategically address this potential problem. In this paper, we explore how the strategic naming of products might enhance audience attention despite the liabilities associated with category spanning. Drawing on a sample of films released in the United States market between 1982 and 2007, we analyze different naming strategies and show that names that simply signal familiarity are not potent enough to offset the illegitimacy discount, while names imbued with known reputations serve as a symbolic device that enhances audience attention to genre-spanning films.

A Computationally Efficient Fixed Point Approach to Dynamic Structural Demand Estimation

This paper develops a computationally efficient approach to the estimation of dynamic structural demand with product panel data. The conventional GMM approach relies on two nested fixed point (NFP) algorithms, each developed by Rust (1987) and Berry, Levinsohn, and Pakes (1995). We transform the GMM into a quasi-Bayesian (Laplace type) estimator and develop a new MCMC method that efficiently solves the fixed point problems. Our approach requires no stronger assumptions than the GMM and can thus avoid bias from misspecified models. In Monte Carlo analysis, the new method outperforms both NFP and MPEC, particularly in large-scale estimations.

Bayesian Estimation of Finite-Horizon Discrete Choice Dynamic Programming Models

We develop a Bayesian Markov chain Monte Carlo (MCMC) algorithm for estimating finite-horizon discrete choice dynamic programming (DDP) models. The proposed algorithm has the potential to reduce the computational burden significantly when some of the state variables are continuous. In a conventional approach to estimating such a finite-horizon DDP model, researchers achieve a reduction in estimation time by evaluating value functions at only a subset of state points and applying an interpolation method to approximate value functions at the remaining state points (e.g., Keane and Wolpin 1994). Although this approach has proven to be effective, the computational burden could still be high if the model has multiple continuous state variables or the number of periods in the time horizon is large. We propose a new estimation algorithm to reduce the computational burden for estimating this class of models. It extends the Bayesian MCMC algorithm for stationary infinite-horizon DDP models proposed by Imai, Jain and Ching (2009) (IJC). In our algorithm, we solve value functions at only one randomly chosen state point per time period, store those partially solved value functions period by period, and approximate expected value functions nonparametrically using the set of those partially solved value functions. We conduct Monte Carlo exercises and show that our algorithm is able to recover the true parameter values well. Finally, similar to IJC, our algorithm allows researchers to incorporate flexible unobserved heterogeneity, which is often computationally infeasible in the conventional two-step estimation approach (e.g., Hotz and Miller 1993; Aguirregabiria and Mira 2002).

Optimal Distinctiveness in the Console Video Game Industry: An Exemplar-Based Model of Proto-Category Evolution

In this paper, we develop an exemplar-based model of the emergence and evolution of proto-categories—new groupings of products that are only weakly entrenched but have the potential to become widel...

Software Piracy and Outsourcing in Two-Sided Markets

This paper examines the role of software piracy in digital platforms where a platform provider makes a decision of how much software to produce in-house and how much to outsource from a third-party software provider. Using a vertical differentiation model, we theoretically investigate how piracy influences the software outsourcing decision. We find that when piracy is intermediate, the loss in in-house software profits due to piracy outweighs the loss in licensing fee profits. As a result, an increase in piracy leads to more outsourcing. However, when piracy is high, it becomes too expensive for the platform provider to subsidize the software provider, resulting in a decrease in outsourcing. Moreover, when software variety is also endogenously chosen by firms, the platform providers incentive to develop software variety in-house depends not only on the return from software profits but also on the return from hardware profits. Under such a situation, an increase in piracy always leads to less outsourcing and less total software variety. To provide additional insights on the outsourcing decision, we conduct empirical analyses using data from the U.S. handheld video game market between 2004 and 2012. This market is a classical two-sided market, dominated by two handheld platforms (Nintendo DS and Sony PlayStation Portable) and is known to have suffered from software piracy significantly. Our regression results show that in this market, piracy increases outsourcing but has no effect on the total software variety.

On the Dynamics of Brand Extensions: The Case of Movies

A key precept of brand extension theory is that brand extension, as opposed to new brand, reduces the risk of new product trial in experience goods categories. In this paper we argue that this property has specific testable implications for the dynamics of sales. In particular, in the movie industry—where brand extension takes the form of sequels—sequels’ sales ought to be more “front loaded” than originals’ sales. On three measures of front-loadedness—ratio of opening week (weekend) box-office to total box-office, average purchase time, and time to peak sales—we verify this prediction robustly. While confirming that new brand extensions are indeed less risky to consumers than new brands, our results also suggest that signaling theories such as those of Nelson (1974) do not have much bite in movies.

Balancing Exclusivity and Accessibility: Patterns of Brand and Product Line Extension Strategies in the Fashion Luxury Industry

Abstract This article discusses the role of brand and product line extension strategies in balancing exclusivity and accessibility in the fashion luxury industry. Many luxury brands have long considered mass consumers as an important driver for their business growth, and their importance has kept increasing in the past two decades partly due to the emergence of e-commerce. However, many argue that going too mass could be a dangerous move because it may damage their luxury brand image in the long run. To manage the balance, it is essential that luxury brands maintain their perceptions of exclusivity and uniqueness by carefully designed marketing strategies. In this article, we discuss two common price-segmentation approaches that allow luxury brands to control the balance: brand and product line extensions. We first review conceptual theories on these extension strategies. We then examine the current industry practices using data on product prices and category membership from ten fashion luxury brands in 2015. Our data analysis reveals patterns that are mostly consistent with theoretical predictions. In particular, most of the luxury brands in our sample use distinct product and pricing strategies for their original product category and extension categories so as to control the balance between exclusivity and accessibility. We provide further discussions and managerial implications for the balancing role of brand and product line extension strategies.

Category Spanning, Naming Strategies and Performance Implications in the US Film Industry.

The article discusses the strategy of using a common name for a series of products, in this case all films released in the U.S. from January 1, 1982 through April 12, 2007. Name is a product aspect affecting consumer perception and evaluation of the products, according to the article. According to the authors, common naming is essential to the growth and to the products survival. It guarantees benefits through its ability to signal identity and reputation to the consumers while providing legitimacy and reducing consumer search and monitoring costs. The legitimacy shield releases organizations from the category conformity. The concepts of category and genre spanning are discussed.