Price Dimensions Research Articles

‘Nobody is perfect’: Asset pricing and long-run survival when heterogeneous investors exhibit different kinds of filtering errors

In this paper we analyze an economy with two heterogeneous investors who both exhibit misspecified filtering models for the unobservable expected growth rate of the aggregated dividend. A key result of our analysis with respect to long-run investor survival is that there are degrees of model misspecification on the part of one investor for which there is no compensation by the other investor's deficiency. The main finding with respect to the asset pricing properties of our model is that the two dimensions of asset pricing and survival are basically independent. In scenarios when the investors are more similar with respect to their expected consumption shares, return volatilities can nevertheless be higher than in cases when they are very different.

'Nobody is Perfect': Asset Pricing and Long-Run Survival When Heterogeneous Investors Exhibit Different Kinds of Filtering Errors

In this paper we analyze an economy with two heterogeneous investors who both exhibit misspecified filtering models for the unobservable expected growth rate of the aggregated dividend. A key result of our analysis with respect to long-run investor survival is that there are degrees of model misspecification on the part of one investor for which there is no compensation by the other investor's deficiency. The main finding with respect to the asset pricing properties of our model is that the two dimensions of asset pricing and survival are basically independent. In scenarios when the investors are more similar with respect to their expected consumption shares, return volatilities can nevertheless be higher than in cases when they are very different.

Price Caps in Multiprice Markets

Many consumer markets feature a multidimensional price. A policy maker—a legislator, a regulator, or a court—concerned about the level of one price dimension may decide to cap this price. How will such a price cap affect other price dimensions? Will the overall effect be good or bad for consumers? For social welfare? Price caps can be beneficial when sellers set prices in response to consumers’ misperception. The scope for welfare-enhancing regulation depends on the type (and direction) of the underlying misperception and on market structure.

Sovereign Stress, Unconventional Monetary Policy, and SME Access to Finance

We investigate the effect of sovereign stress and of unconventional monetary policy on small firms’ financing patterns during the euro area debt crisis. We find that after the crisis started, firms in stressed countries were more likely to be credit rationed, both in the quantity and in the price dimension, and to increase their use of debt securities. We also find evidence that the announcement of the ECB’s Outright Monetary Transactions Program was followed by an immediate decline in the share of credit rationed firms and of firms discouraged from applying. In addition, firms reduced their use of debt securities, trade credit, and government subsidized loans. Firms with improved outlook and credit history were particularly likely to benefit from easier credit access.

Modern wedding industry in Egypt: the influence of key wedding venue attributes on newlywed couple satisfaction and future intention

While festive events industry attracted researchers in the last decades, there is a shortage of studies focusing on wedding venue attributes selection. From this point, this study examined Egyptian newlywed couples' perceptions of wedding venue in Alexandria City. Moreover, it investigated the key wedding venue attributes that influenced the couples' overall satisfaction and their future intention, including nine key dimensions of service, price, food and beverages, atmosphere, entertainment, facilities, location, availability, and decoration. The results suggested statistically significant differences found between hotel ballrooms and banquet halls in terms of location. Brides indicated higher mean rankings compared to grooms in most attributes. In general, the research model proved a direct relation between the key dimensions and overall couples' satisfaction. The implications for improving wedding venues management marketing strategies in industry practitioners are also discussed.

Identifying Early Warning Indicators for Real Estate-Related Banking Crises

This Occasional Paper presents a formal statistical evaluation of potential early warning indicators for real estate-related banking crises. Relying on data on real estate-related banking crises for 25 EU countries, a signalling approach is applied in both a non-parametric and a parametric (discrete choice) setting. Such an analysis evaluates the predictive power of potential early warning indicators on the basis of the trade-off between correctly predicting upcoming crisis events and issuing false alarms. The results in this paper provide an analytical underpinning for decision-making based on guided discretion with regard to the activation of macro-prudential instruments targeted to the real estate sector. After the publication of the ESRB Handbook and the Occasional Paper on the countercyclical capital buffer, it represents a next step in the ESRB’s work on the operationalisation of macroprudential policy in the banking sector. This Occasional Paper highlights the important role of both real estate price variables and credit developments in predicting real estate-related banking crises. The results indicate that, in addition to cyclical developments in these variables, it is crucial to monitor the structural dimension of real estate prices and credit. In multivariate settings macroeconomic and market variables such as the inflation rate and short-term interest rates may add to the early warning performance of these variables. Overall, the findings indicate that combining multiple variables improves early warning signalling performance compared with assessing each indicator separately, both in the non-parametric and the parametric approach. Combinations of the abovementioned indicators lead to lower probabilities of missing crises while at the same time not issuing too many false alarms. In addition to EU level, they also perform relatively well at individual country level. Even though the best performing indicators have relatively good signalling abilities at the individual country level, national authorities are encouraged to perform their own complementary analyses in abroader framework of systemic risk detection, which augments potential early warning indicators and methods with other relevant inputs and expert judgement. JEL Classification: G21, G18, E58

An Indian customer surrounding 7P׳s of service marketing

The primary aim of the study is to examine the effects of services marketing mix elements on Indian customer for making the appropriate marketing mix strategy in banking services context. The study is based on a sample of 351 customers of bank users in India who filled an online questionnaire. The paper uses confirmatory factor analysis and structural equation modeling (SEM) to analyse and confirm the conceptual model proposed in the research. The paper finds that physical evidence, process, place, and people have a positive and significant effect on customer. The study suggested an appropriate services marketing mix strategy for Indian customer perspective in the context of banking services. The paper would help the bankers to create marketing strategies and action plans to retain their existing customers and to attract new customers. The paper is first of its kind to discuss the effects of ‘7Ps’ of services marketing mix collectively on Indian customer. The results of the analysis indicated that managing the marketing mix dimensions of product, price and promotion is of less importance except place than managing interactive marketing dimensions such as people, physical evidence, and process.

Dynamic Platform Design

Abstract I model dynamic product design along price and non-price dimensions by a firm in a market with positive network externalities between consumers. In the case of a usage fee, I provide conditions under which the steady state (SS) is unique and show that the introductory price is negative and therefore below the positive SS price. Moreover, SS price increases with the size of demand frictions and is therefore higher than in a static model. A welfare maximizer's SS price is lower than a profit-maximizer's, and it is negative if demand frictions are low enough. If a platform chooses product scope (in the sense of Johnson and Myatt (2006)), it is optimal to begin as a niche platform and to broaden scope as market share increases. When the platform can target different groups of consumers with different prices, it caters to those consumers whose price-elasticity of demand is large relative to their valuation for network externalities. Finally, we show how the model can be extended to the case where consumers have multidimensional types and make heterogeneous contributions to the network's value.

Mapping of Tablet PC Based On Consumer Perception (Case Study of Bandung Electronic Center Visitors)

Gadget development is becoming a phenomenon which attract the world’s attention today. Sophisticated telecommunications technology encourages the creation of newgadget especially Tablet PC. More and more people using this gadget to replace their computer use. The purpose of this study was to mapthe position of several Tablet PC brands such as Apple, Samsung, Smartfren, Acer, and ASUS based onthe perception of Bandung Electronic Center(BEC) visitors. Each day, around 25.000-40.000 visitors visit the BEC which is the largest electronic mall in Bandung.
 This is an exploratory reseach using the descriptive method. Multidimensional scaling technique used to mapped the 5 Tablet PC brandsinto six dimensions; product feature, brand, price, battery consumption (endurance), lifestyle and design. The questionnaires were delivered to 100 respondents using purposive sampling method.
 The results of this study indicated that Apple is still the best for product feature based on consumer perceptions . As for the best brand the winner is Samsung followed by Apple, ASUS, Acer and Smartfren. Based on price dimension the cheapest Tablet PC is Smartfren and Apple is the most expensive. Samsung is also the winner in the field of battery power consumption and Acer is the worst. The best Tablet PC in the field of the lifestyle is Samsung followed by Apple, ASUS, Acer and Smartfren. Finally, Tablet PC with the best design also goes to Samsung then followed by Apple, ASUS, Acer and Smartfren.
 Keywords: Consumer Perseption,, Positioning, Multidimensional Scaling Technique, TabletPC

The Bright Side of Loss Aversion in Dynamic and Competitive Markets

A well-established phenomenon of consumer buying behavior is that consumers evaluate prices relative to a reference point and exhibit loss aversion; i.e., their propensity to buy is more negatively affected by prices above the reference point than it is positively affected by prices below the reference point. The objective of this paper is to analytically examine how the competitive strategy and profitability of firms are affected by the presence of consumer loss aversion in the price dimension. Although we assume that consumer loss aversion increases consumer propensity to search for lower prices, we find that it does not necessarily lead to lower prices or profits when firms compete over multiple periods and when the consumer reference price in subsequent periods is affected by current prices. Specifically, consumer loss aversion could lead to higher prices and profits when consumer valuation is sufficiently high relative to search costs and the proportion of consumers with positive search costs is in an intermediate range. We also show that when forward-looking firms incorporate the negative effect of price promotions on future profits, the equilibrium range of price promotions may actually increase.

Post-Keynesian stock-flow models after the subprime crisis: the need for micro-foundations

The subprime crisis exposed a flaw in post-Keynesian stock-flow models, namely their concession to mainstream macroeconomic theory that financial markets obey a price-clearing rule. Two reasons lie behind this concession. The first is the assumption that investors give priority to the price dimension of securities and only secondary importance to their quantity dimension. This paper argues that following recent structural changes in domestic economies the securities markets are now dominated by investors who give co-priority to the price and quantity dimensions of securities, for which reason these markets now operate to the same demand-led quantity adjustment process as do all other markets. The second and more fundamental reason is that post-Keynesian stock-flow models lack a micro-foundational unit of analysis from which can be derived an overarching methodological framework that is not only externally realistic but also internally coherent. This paper argues that the unit of analysis that best fits this purpose is the ‘commodity’, a term that will be used both exclusively, to denote only those entities that are priced to a market standard, and inclusively, to denote not only the outcomes of human activities but also the capacities for activity that are subject to pricing standards.

Speed–Quality Trade-Offs in a Dynamic Model

An important trade-off organizations face in many environments is one between quality and speed. Working faster may result in greater output and less delay, but may result in lower quality and dissatisfied customers. In this work, we consider dynamic models in a monopoly setting to explore the optimal balance among the multiple dimensions of speed, price, and wait time. The impact of quality is captured via the market demand potential, which is a function of the speed (quality) in the previous period. We obtain several results and insights. First, in scenarios where speed may be difficult to change over time (e.g., some automated production lines) but price can be changed, we show that the optimal price charged is such that the demand rate remains constant over time, even though the price and market potential are changing. Furthermore, we identify conditions when the firm will work at a speed that is higher or lower than a benchmark speed and characterize the behavior of prices over time. Second, in scenarios where a firm may not be able to change prices but can adjust the speed each period, the firm starts at a speed that may be faster or slower than a benchmark speed but converges to it over time. In this constant price case, as the benchmark speed increases, the initial speed adopted by the firm is actually lower but increases more quickly thereafter. We also characterize the behavior of price and speed in settings where both can be changed over time. Interestingly, a firm typically starts at a slow speed and increases the speed, price, and demand over time. Although our main model assumes that the firm internalizes the congestion cost, several of our results extend to a scenario where the demand rate is impacted by the congestion level.

Weighting Elementary Prices in Consumer Price Index Construction Using Spatial Autocorrelation

The Consumer Price Indexes (CPI) are used in current economic systems to measure inflation. When constructing CPIs, however, official institutions have systematically overlooked the spatial dimension of elementary prices. Ignoring the fact that prices are collected at geographical locations implicitly implies considering prices as spatially independent, when in fact they are not. To solve this problem, this article proposes to weight basic price data by taking into account the spatial correlation they display. The weighted geometric and arithmetic means suggested generalize and improve the simple geometric and arithmetic means currently in use.

On the Symbolic Production of Digital Markets for Cultural Goods

This paper proposes and mobilizes a cultural economic framework to study the dynamic formation of digital markets for cultural goods. Adapting Hayek's theory of price to recent developments in the field of cultural sociology, it proposes the idea that an effective price system condenses information dispersed in society, and then enters into a performative process of symbolic communication that is perceived as ‘authentic’ by the consumers. After analyzing ‘artificial’ and ‘authentic’ current strategies aimed at producing digital markets for cultural goods, which are especially sensitive to the symbolic dimension of price, the article suggests the hypothesis that the digital market has been constructed as a zero- or quasi-zero-price economic space, and that it is the offline and material market of cultural products the one that collects the higher revenues derived from the ‘authentic’ generation of value taking place in the digital marketplace.

Effectiveness of volatility models in option pricing: evidence from recent financial upheavals

Purpose – The purpose of this paper is to explore the forecasting effectiveness of Black-Scholes (BS) focussing parity analysis of time series econometric and implied volatility (IV) numerical techniques. Design/methodology/approach – To analyze the comparative competitiveness of econometric time series and IV models this paper consolidated the study with their inter-relations leading toward multilayered moneyness-maturity correlation of model and market option prices, thoroughly determined the moneyness-maturity combinations of error metrics of Nifty index options. Findings – Out of six models tested and critically examined here, the paper procures only a single model, IV, which best caters to the requirements of option traders and as a result the paper ended up that only IV supports to multifarious moneyness-maturity dimension of option pricing of Nifty index options. The analysis also confirms that the standard VIX is not a reliable tool for determining the base price of Nifty index options (via BS). As the IV landmarks during the most dynamic phase of Indian capital market which is a touchstone to justify the quality of any model, the paper can deduce that IV could continue to perform in hardships of financial contraction par smoothly and effectively. Practical implications – The final outcome of this research which ended successfully in exploring a dominant model, guided successfully through the most volatile period of Indian economy can be used to safe guard investor's faith and to figure a design which could compete on the canvass of option pricing. Originality/value – As equity market is always subject to highly unpredictable conditions and may keep on experiencing it through all times to come, the unified objective of research is to find out the most impeccable volatility model to meet out the requirements of option practitioners, specifically contributing upto the satisfaction and expected results during tumultuous period.

Students’ demand for smartphones

PurposeThe study aims to examine structural relationships of product features, brand name, product price and social influence with demand for Smartphones among Malaysian students’.Design/methodology/approachData collected from 320 valid pre‐screened university students studying at the pubic higher learning institution in Federal Territory of Labuan, Malaysia who have experience in using and owning Smartphones, using a structured questionnaire, with closed‐ended questions, employing a convenient sampling technique, were tested against the research model using the structural equation modeling (SEM) approach via AMOS 20.0 computer program.FindingsEmpirical results via SEM divulged that brand name and social influence have an effect on the increasing demand for Smartphones among Malaysian students. The first is confirmed as the most influential factor, followed by the latter. This is according to standardised path coefficients and their statistical signicance.Research limitations/implicationsThis study contributes significantly to a more thorough understanding of the determinants of demand for Smartphones among Malaysian students’ by emphasizing the dimensions of product features, brand name, product price and social influence. Students’ demand for Smartphones is highly influenced by aspects of the brand name of the Smartphone itself and social influence from friends and family members.Practical ImplicationsSmartphone providers, manufacturers, application developers and programmers should improve the current ability and performance of Smartphones by upgrading hardware and software driven services for better user interaction and engagement in order to be marketable and sustainable in meeting consumer unlimited needs and wants. They should also emphasize their brand name in advertising to be well positioned in consumers’ minds when making the decision to purchase and own a Smartphone. Positive viral marketing spread via social networking sites could help Smartphone providers to strengthen the competitive advantage of their product brands. The attractiveness of the message content of the advertisement on the social networking sites could improve marketing strategies of the Smartphone brand.Originality/valueThis study provides valuable insight into consumer behavior regarding Smartphones demand by examining the factors that influence students’ demand for using and owning Smartphones, which is not much covered in the literature in Malaysia context. The lessons can also be replicated in other countries for marketing Smartphones.

Do banks price discriminate spatially? Evidence from small business lending in local credit markets

In this paper we explore the effects of bank–borrower physical proximity on price and non-price aspects of small business lending in local credit markets. Along the price dimension, our analysis reveals that interest rates increase with bank–borrower distance and decrease with the distance between borrower and other competing banks. Along the quantity dimension, we observe that more distant borrowers are more likely to experience binding credit limits. We also show that the quantity effects of bank–borrower distance are concentrated among less transparent firms. Our findings are consistent with pricing based on marginal costs that reflect information-based factors, and are in contrast to the established paradigm, where banks adopt spatial discriminatory pricing rules when lending to small-sized enterprises.

The Influence of Perceived Service Quality, Mooring Factor, and Relationship Quality on Customer Satisfaction and Loyalty

The phenomenon of declining in customer satisfaction and loyalty becomes the major concern of the service firms because the two factors determine the performance of the firms. Furthermore, factors that simultaneously influence customer satisfaction and loyalty are the customer perception on service quality, the mooring factors and the relationship quality. To analyze the relationship amongst factors that influence the customer satisfaction and loyalty, this research set some measurement on each factor/variable. The customer perception on service quality is measured by dimensions of call quality, price structure, mobile devices, value added services, convenience in procedure, and customer support. The mooring factors are measured by attitude, social influence, switching cost, prior switching behaviour, and variety seeking. The relationship quality is measured by dimensions of trust, familiarity and partnering. Customer satisfaction is measured by dimensions of price, functional, technical, and emotional. The last, the customer loyalty is measured by the dimension of cognitive loyalty, affective loyalty, conative loyalty and action loyalty. To measure all the constructs and indicators, this research distributes questioners to 370 students who subscribe cellular operator service at eight universities in Bandung. The method of data analysis of this research is Structural Equation Modeling (SEM). The research result proved that the customer perception on service quality and relationship quality have positive correlation with mooring factors. Then, the perception on service quality has positive direct influence customer satisfaction. On the other hand, mooring factors and relationship quality does not have direct influence customer satisfaction. However, mooring factors is proven to be moderating variable of service quality and relationship quality to customer satisfaction and has positive relationship. Moreover, the customer perception on service quality, relationship quality, and customer satisfaction has positive direct influence the customer loyalty.

Studying the Effects of Negative and Positive Perceptions of Price on Price Mavenism

Despite the importance of price mavens, little empirical research exists on understanding its theoretical and marketing drivers; especially in different cultural contexts Buyers in Iran often communicate positive and negative purchasing experiences through Word-of-Mouth (WOM), which creates special problems and opportunities for marketers. Price mavenism, which is associated with price-information searching and price-sharing behavior, is often considered as negative dimension of price. The purpose of this study, however, is to propose price mavenism as an outcome variable arising from both positive perceptions of price (prestige sensitivity) and negative perceptions (price and value consciousness). For this purpose structured questionnaire was developed to collect data and totaling 206 questionnaires of Iranian consumers were analyzed. The conceptual model was tested using structural equation modeling. This study found that prestige sensitivity, price consciousness and value consciousness shaped price mavenism among the Iranians, supporting the idea that price mavenism arises from both positive and negative perceptions of price.

Pricing in the international takeoff of new products

This study focuses on the effect of two dimensions of price (relative price and price volatility) on the international takeoff of new products. The study examines these drivers of takeoff using a novel data set of bimonthly observations of 7 new consumer electronic products in 8 countries. The empirical analysis reveals that both relative price and price volatility significantly impact the hazard of takeoff. However, although the effect of relative price is stable across contexts, the effects of price volatility are moderated by wealth, culture, and contagion. The use of temporally disaggregate data at the bimonthly level allows for the identification of the effect of price volatility and enables a more precise identification of takeoff than that achievable with annual data.