Petr Mariel

A model of optimal advertising expenditures in a dynamic duopoly

This paper develops a dynamic model of oligopolistic advertising competition. The model is general enough to include predatory advertising and informative advertising as particular cases. The analysis is conducted in a differential game framework and compares the open-loop and feedback equilibria to the efficient outcome. It is found that for the informative advertising competition game, advertising levels are closer to the collusive outcomes in a feedback equilibrium. In the case of predatory advertising, expenditures are inefficiently high in a feedback equilibrium and the open-loop solution is more efficient.

Incorporating environmental attitudes in discrete choice models: An exploration of the utility of the awareness of consequences scale

Environmental economists are increasingly interested in better understanding how people cognitively organise their beliefs and attitudes towards environmental change in order to identify key motives and barriers that stimulate or prevent action. In this paper, we explore the utility of a commonly used psychometric scale, the awareness of consequences (AC) scale, in order to better understand stated choices. The main contribution of the paper is that it provides a novel approach to incorporate attitudinal information into discrete choice models for environmental valuation: firstly, environmental attitudes are incorporated using a reinterpretation of the classical AC scale recently proposed by Ryan and Spash (2012); and, secondly, attitudinal data is incorporated as latent variables under a hybrid choice modelling framework. This novel approach is applied to data from a survey conducted in the Basque Country (Spain) in 2008 aimed at valuing land-use policies in a Natura 2000 Network site. The results are relevant to policy-making because choice models that are able to accommodate underlying environmental attitudes may help in designing more effective environmental policies.

A model of advertising with application to the German automobile industry

This paper develops a dynamic duopolistic model of advertising and price competition. Advertising accumulates a stock of goodwill which enters directly into the demand functions and both the cooperative and predatory effects of advertising are considered. It is shown that firms invest more in advertising the higher the degree of cooperativeness of advertising and some comparative static results are provided. In the second, empirical part of the article, estimations of the demand equations are presented using data from the German automobile industry. The main conclusion drawn is that advertising plays an important role in this market and has a predatory nature.

The Knowledge-Capital Model of FDI: A Time Varying Coefficients Approach

The present article reexamines some of the issues regarding the Knowledge-Capital Model that encompasses both horizontal and vertical Foreign Direct Investment. The empirical support for this model is however mixed. This article proposes a new way of estimating coefficients by allowing them to vary over time. The estimation results obtained using data from 30 OECD countries for the period from 1982 to 2003 confirm that these coefficients cannot be considered as constant over time and that the vertical component of the Knowledge-Capital Model is relevant.

Nonparametric Estimation of the Effects of Advertising: The Case of Lydia Pinkham

This article reexamines some of the issues raised subsequent to the classical research by Palda (1964). We use a nonparametric estimation method that allows us to incorporate both seasonal and smoothness constraints to estimate the parameters of a demand function using monthly data on Lydia Pinkhams vegetable compound. The analysis indicates that the parameters of the estimated demand equation are not constant throughout the long period of the data, which covers the whole life cycle of the product.

Análisis de la demanda residencial de los servicios básicos en España usando un modelo QUAIDS censurado

El presente articulo analiza la demanda residencial espanola en los bienes que forman parte de los servicios basicos del hogar (electricidad, gas natural y agua potable) en 2012. El analisis se realiza utilizando un modelo QUAIDS adaptado para tratar la censura en el consumo de gas natural segun el enfoque de Tauchmann (2010), uno de los ultimos avances en esta materia. Los resultados muestran que la demanda de electricidad y agua potable es menos sensible a las variaciones de sus precios e ingreso residencial que la demanda de gas natural.

Hybrid discrete choice models: Gained insights versus increasing effort

Hybrid choice models expand the standard models in discrete choice modelling by incorporating psychological factors as latent variables. They could therefore provide further insights into choice processes and underlying taste heterogeneity but the costs of estimating these models often significantly increase. This paper aims at comparing the results from a hybrid choice model and a classical random parameter logit. Point of departure for this analysis is whether researchers and practitioners should add hybrid choice models to their suite of models routinely estimated. Our comparison reveals, in line with the few prior studies, that hybrid models gain in efficiency by the inclusion of additional information. The use of one of the two proposed approaches, however, depends on the objective of the analysis. If disentangling preference heterogeneity is most important, hybrid model seems to be preferable. If the focus is on predictive power, a standard random parameter logit model might be the better choice. Finally, we give recommendations for an adequate use of hybrid choice models based on known principles of elementary scientific inference.

Uncovering the Nexus Between Attitudes, Preferences, and Behavior in Sociological Applications of Stated Choice Experiments

Multifactorial survey experiments such as stated choice experiments are used more and more frequently in social science research. In this article, based on an experimental study on ethical and political consumption, we explore the potential of hybrid choice models to explicitly model latent psychological factors such as attitudes, overcoming a possible endogeneity bias and misrepresentation of causality. To this end, we employ a hybrid latent class choice model (HLCCM) in which the latent class structure allocates individuals to classes according to underlying latent attitudes that also influence the answers to attitudinal questions. This allows, in line with sociological action theories, a theory-guided testing of preference segmentation and modification caused by attitudes. We compare the complex HLCCM with less complex models that do not take the latent variable nature of attitudes into account and discuss in which cases less complex models might be more appropriate. However, the HLCCM always has the advantage of providing structure for theory testing and is therefore a useful tool to uncover preference heterogeneity, preference modification, and decision-making processes in sociological and other social science research.

A multiple indicator solution approach to endogeneity in discrete-choice models for environmental valuation

Endogeneity is an often neglected issue in empirical applications of discrete choice modelling despite its severe consequences in terms of inconsistent parameter estimation and biased welfare measures. This article analyses the performance of the multiple indicator solution method to deal with endogeneity arising from omitted explanatory variables in discrete choice models for environmental valuation. We also propose and illustrate a factor analysis procedure for the selection of the indicators in practice. Additionally, the performance of this method is compared with the recently proposed hybrid choice modelling framework. In an empirical application we find that the multiple indicator solution method and the hybrid model approach provide similar results in terms of welfare estimates, although the multiple indicator solution method is more parsimonious and notably easier to implement. The empirical results open a path to explore the performance of this method when endogeneity is thought to have a different cause or under a different set of indicators.

Estimating the Direct Rebound Effect in the Residential Energy Sector: An Application in Spain

This chapter estimates the direct rebound effect in residential heating and domestic hot water services in Spain in 2012. The fuels analysed are electricity and natural gas. Contrary to previous research, the direct rebound effect is calculated using, among others, data on unit variable cost of energy, the amount of energy consumed per annum and residential CO2 emissions. The direct rebound effects estimated are found to be relatively high, so an increase in energy efficiency can be expected to produce only a slight decrease in consumption. On the other hand, it is found that a decrease in residential CO2 emissions may result in a drop in residential energy consumption, with natural gas as the most sensitive fuel.