Geographic Market Research Articles

Product and geographic market diversification in U.S. banking

Prior literature either estimates economies of product diversification or evaluates the effects of market expansion on bank performance, but few studies look at the intersection of product and geographic diversification. We examine if the market expansion opportunities resulting from deregulation helped improve diversification/scope economies exhibited by banks. We leverage spatiotemporal variation in the implementation of deregulation laws across states to identify this relationship using a difference-in-differences framework. We find that the inter/intrastate deregulation accounts for a modest but statistically significant decrease in diversification diseconomies, and these gains were long-lasting. The findings suggest that geographic and product diversification are complementary.

Misallocation and price distortions: A revenue decomposition of medical service providers in China

The provision of healthcare services and the distribution of medial resources across the China health system hierarchy is characterized by an inverted pyramid with alarming congestions in the so-called AAA tertiary hospitals. This study tries to investigate this baseline misallocation issue prior to the introduction of the new healthcare reforms in 2009. Building upon established framework, we developed an alternative measure for dispersion of factor price distortions. Using a large national microdata, the results obtained are consistent with previous studies in that for a less developed geographical market, often characterized by poorer factor mobility and weaker market competition, dispersion of the factor price distortions is high, reflecting high degree of misallocation. We also developed a decomposition of revenue dispersion to make inferences about the major channels through which the inverted pyramid arises. The analysis reveals the extent to which, the disproportionately large share of revenues generated by high-tier tertiary hospitals in China, can be attributed to their high productivity and the public trusts in them as providers of quality care.

Digital Mergers: A Primer

From Facebook acquiring WhatsAPP and Instagram to Microsoft buying out Linkedin, Skype and Github or Google swallowing Motorola Mobility, DoubleClick or Nest Labs, mergers and acquisitions in the digital economy have been controversial. Some of the concerns have been fairly traditional. While the development of the digital economy does not either call for a revolution in how we conduct merger control, it is likely to require some significant changes in competition guidelines and will require close coordination between competition authorities and other regulatory agencies. The main characteristics of digital technologies are algorithms, data, bridging of distance and speed. These characteristics have a number of important consequences, which are explored in this study. This underlines the need for forward looking merger review and the possibility of using access/interoperability remedies. The combination of algorithms and data has allowed unprecedented targeting of advertising to online consumers as well as a tailoring of the offers (including prices) received by each individual. These mergers pose a serious challenge to our usual economic analysis of horizontal effects as well as to our traditional approach to market definition. However, while the role of data in digital competition is undeniable, we currently lack the information required to derive broad principles as to how data should be considered in merger review. The study examines these issues, drawing on economic theory and existing caselaw in the EU, US and BRICS. It concludes with several recommendations for competition authorities, touching upon an array of issues, such as product and geographic market definition, theories of harm, efficiencies, potential competition, counterfactuals and standard of proof.

Defining Geographic Markets with Willingness-to-Travel Circles

Issues of spatial competition play a key role in many antitrust matters in terms of both defining relevant markets and evaluating competitive effects. One area where this is particularly important ...

Firm exporting and investment in exploratory and exploitative R&D

PurposeThis study aims to investigate how firms’ internationalization activities through exporting influence their organizational learning. Specifically, this study examines how the level of exporting and geographic market scope impact a firm’s exploratory and exploitative R&D investment differently.Design/methodology/approachUsing a sample of 7,055 firms in Spain during the period 2006–2011, the study uses regression analysis (generalized least squares random effects) to test various hypotheses.FindingsAlthough exporting improves organizational learning, learning opportunities vary for different aspects of exporting. Specifically, the level of a firm’s exporting has a significant positive effect on its exploitative R&D investment, whereas geographic market scope of a firm increases its exploratory R&D investment.Practical implicationsThe findings can aid in shaping policies and firms’ decisions pertaining to exporting and exploratory and exploitative R&D investment. As the findings indicate that, the determinants of exploratory and exploitative R&D investment are different, managers and policymakers, who aim at a specific type of R&D investment, should understand which exporting strategy they should pursue.Originality/valuePrior research suggests that exporting improves organizational learning. This study extends this knowledge by showing that different aspects of exporting, specifically, the level of exporting and geographic market scope, drive different types of organizational learning.

Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review

Markets for watershed ecosystem services have been developed as a tool in integrated water resources management. The development of vast markets for watershed ecosystem services has raised attention for the performance of these markets, their institutional design, and how their institutional design influences market performance. The main research questions guiding this systematic literature review are: Which types of markets can be distinguished; how is market performance operationalized; which institutional design characteristics are distinguished in the literature; and which of these characteristics are crucial to understanding performance? A systematic review of 224 journal articles from Web of Science leads to several main findings regarding these questions. Market performance is usually equated with effectiveness in the reviewed articles. Discussions in these articles include whether the market contributes to the preservation of ecosystem services, what the distributional impacts are, and what the participation rate is. The reviewed articles have illustrated specific institutional design features as well. The key features include the security of property rights, role of governments, bundling of ecosystem services (ES), and role of trust. In those articles addressing the relationship between institutional design and performance, the relevance of monitoring and enforcement, clearly defined property rights, and geographical market scope have been pointed out.

The Transmission of Economic Shocks in Multi-Divisional Firms: A Capabilities-Based View

This study develops a capabilities-based perspective on resource allocation by examining the influence of parent- and division-level capabilities on the transmission of economic shocks in multi-divisional firms. We begin by arguing that the effects of parent-specific crises spread to divisions, resulting in significantly reduced asset growth in these divisions compared to divisions for which the parent is not exposed to a crisis. We contend, however, that differences in experience levels across firms, both at the parent and division levels, lead to heterogeneity in capabilities, and these capabilities attenuate the transmission of economic crises. This is because parents with greater capabilities should be less exposed to economic shocks, while divisions with greater capabilities may be less dependent on parent resources. Analyses of panel data on 2,051 foreign divisions of global retailers provides evidence supportive of our arguments: financial crises in parent home countries negatively affect division-level investment, and this effect is attenuated by greater experience of parents, focal divisions, and sister divisions in the same geographic market. Overall, our work provides new insights into how capabilities at multiple corporate levels can influence resource allocation and the exposure of divisions to parent-level shocks.

El protocolo “network” aplicado al estudio de los destinos turísticos: el caso de Gijón (España)

La definición del concepto de destino es un asunto muy complejo, dada la necesidad de consenso entre distintos tipos de académicos y de profesionales, pero muy necesaria para poder establecer un marco adecuado de conocimiento orientado a la planificación y a la gestión del turismo. La mayoría de las nuevas propuestas giran en torno a la perspectiva de Red (Network), con intra e interrelaciones entre agentes, atracciones y servicios turísticos, e incluso destinos. El factor experiencia de “segunda generación”, apoyado en el fenómeno de la co-creación, es actualmente considerado el leit motiv para el turista. De acuerdo a tal concepto son los turistas quienes, con las elecciones de recursos y servicios, y con sus movimientos en los territorios, definen realmente un destino como tal, y en sus diferentes facetas. Este trabajo recurre al uso del conocido juego del SmartMax para ofrecer un protocolo empírico de conocimiento, cuantitativo y cualitativo, de un destino turístico. Apoyándose en datos sobre la movilidad de los turistas, y mediante técnicas de análisis multivariable, se consigue identificar los diferentes perfiles de un espacio geográfico como destino turístico, así como el peso relativo de cada uno de ellos: destino único, sede central, destino de circuito y destino de excursionismo. De esta forma se construye una metodología útil para el conocimiento empírico de los destinos turís­ticos, de forma general, e incluso para su aplicación en otros ámbitos del marketing geográfico, en particular.

Masked Heterogeneity in Aggregation: Incorporating Beliefs and Geographic Information into Consumer Willingness to Pay for State Brands

AbstractState marketing programs for food and agricultural products are largely driven by consumers’ desires to purchase in-state products. Evaluations of state marketing programs have largely ignored consumer location and proximity to surrounding states, measures of ethnocentrism, and the presence of other geographic marketing labels. This study examines willingness to pay for own and out-of-state labels for a generic commodity, milk, within an eight-state region. The results show that an aggregate model conceals consumer heterogeneity in marginal willingness to pay values for state brands as compared to a disaggregate model, even when using random parameter logit models.

New member in the boardroom and subsequent strategic change in the product-market scope of the firm

PurposeThe purpose of this paper is to explore the linkages between the appointment of a new management board member and the following strategic change (SC) in the product-market scope of the firm.Design/methodology/approachThe study is based on the whole population of Estonian firms, in total 16,941 observations and the data are retrieved from Estonian Business Register. First, the authors focus on the association between the appointment of a new board member and the likelihood of different types of SC. Second, the authors focus on the association between the new board member’s previous export experience and export-related SC. Logistic regressions are applied for all models.FindingsThe results indicate that there is a significant association between the appointment of a new board member and the subsequent start of exports and also continuing it, entrance into a new industry and making an SC in more broad terms, though the significance levels vary across the composed models. No significant relationship was found with the entrance into the additional geographic market(s) for already exporting firms. There was also a significant association between the previous export experience of a new board member and the subsequent start of exporting.Originality/valueThe authors look at SC in the product-market domain holistically by applying the same data on both geographic and product portfolio expansion options. The authors also introduce the scale and stability contexts of SCs. These aspects are usually neglected from similar studies.

The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885-1905

Small firms dominated the American economy in the nineteenth century, and still dominate in many developing economies today. This paper tests whether geographic market segmentation due to underdeveloped intracity transportation technology precludes the emergence of large retail/wholesale stores. I exploit the natural experiment of Boston's rapid electrification from its previous horse-drawn streetcar system, which occurred between 1889 and 1896. Analyzing newly digitized data, I and that rail-connected locations experienced a sharp decline in the share of sole proprietorships among food retail/wholesale establishments after the electrification relative to off-rail locations. Changes in market access due to streetcar electrification can explain this effect.

25 Years of European Merger Control

We study the evolution of EC merger decisions over the first 25 years of common European merger policy. Using a novel dataset at the level of the relevant antitrust markets and containing all merger cases scrutinized by the Commission over the 1990-2014 period, we evaluate how consistently arguments related to structural market parameters – dominance, concentration, barriers to entry, and foreclosure – were applied over time and across different dimensions such as the geographic market definition and the complexity of the merger. Simple, linear probability models as usually applied in the literature overestimate on average the effects of the structural indicators. Using non-parametric machine learning techniques, we find that dominance is positively correlated with competitive concerns, especially in concentrated markets and in complex mergers. Yet, its importance has decreased over time and significantly following the 2004 merger policy reform. The Commission's competitive concerns are also correlated with concentration and the more so, the higher the entry barriers and the risks of foreclosure. These patterns are not changing over time. The role of the structural indicators in explaining competitive concerns does not change depending on the geographic market definition.

Comparison of Office-Based Physician Participation in Medicaid Managed Care and Health Insurance Exchange Plans in the Same US Geographic Markets

Several recent policy proposals have sought to expand the role of Medicaid in providing health insurance for low-income Americans, but there is little recent information on how physician participation in Medicaid compares with alternative forms of coverage for low-income Americans. To compare the number of office-based physicians included in Medicaid managed care and health insurance exchange plans that operate in the same geographic markets. This cross-sectional study used administrative data from physician network directories and survey data from office-based physicians for Kansas, Nebraska, New York, Tennessee, and Washington. The number of participants totaled 67 057 office-based physicians in the 5 sample states. Data were collected and analyzed from May 2018 to June 2019. Physician participation in a Medicaid managed care or health insurance exchange plan network. The percentage of office-based physicians in a county who indicated during a phone survey that they participated in Medicaid; the percentage of office-based physicians in a county who participated in each Medicaid managed care and health insurance exchange plan network; and the percentage of office-based physicians in a county who participated in at least 1 Medicaid managed care plan or, separately, at least 1 health insurance exchange plan. Of the 67 057 office-based physicians in our sample, 49 983 reported in a telephone survey that they accepted Medicaid. This survey-based measure undercounted the percentage of physicians participating in Medicaid by 5.2% (95% CI, 2.3%-8.1%; P < .001) relative to a measure based on physician network directories. Medicaid managed care physician networks covered a median (interquartile range) of 63.4% (48.0%-81.3%) of office-based physicians compared with health insurance exchange physician networks, which covered 51.0% (31.0%-70.5%). In adjusted analyses, Medicaid managed care plans covered 6.2% (95% CI, 3.2%-9.3%, P < .001) more office-based physicians than health insurance exchange plans operating in the same counties. In the states where the same insurers participated in both markets (New York, Tennessee, Washington), the Medicaid managed care physician networks were 6.5% (95% CI, 3.2%-9.8%, P < .001) larger than the health insurance exchange networks offered by the same insurer. In this cross-sectional study of physician network data, Medicaid managed care physician networks included more office-based physicians than the physician networks of health insurance exchange plans operating in the same geographic markets. This suggests that Medicaid remains a viable option for expanding coverage in the United States.

Destitution Economies: Circuits of Value in Asylum, Refugee, and Migration Control

In this article, we argue that destitution economies of migration control are specific circuits of exchange and value constituted by migration control practices that produce migrant and refugee destitution. Comparative analysis of three case studies, including border encampment in Thailand, deprivation in U.S. immigration detention centers, and deterrence through destitution in the United Kingdom, demonstrate that circuits of value depend on the detachment of workers from citizenship and simultaneously produce both migrant destitution and new forms of value production. Within destitution economies, migration and asylum’s particular juridico-political position as domestic, foreign, and securitized allows legal regimes to produce migrants and asylum seekers as distinct economic subjects: forsaken recipients of aid. Although they might also work for pay, we argue that destitute migrants and asylum seekers have value for others through the grinding labor of living in poverty. That is, in their categorization as migrants and asylum seekers, they occupy a particular position in relation to economic circuits. These economic circuits of migration control, in turn, rely on the destitution of mobile people. Our approach advances political geographies of migration, bordering, and exclusion as well as economic geographies of marketization and value, arguing that the predominance of political analysis and critique of immigration and asylum regimes obscures how those regimes produce circuits of value in and through law, state practices, and exclusion. Furthermore, law, state power, and forced mobility constitute circuits of value and marketization. Conceptualizing these migration control practices as destitution economies illuminates novel transformations of the political and economic geographies of migration, borders, and inequality.

Investigating emergent nested geographic structure in consumer purchases: a Bayesian dynamic multi-scale spatiotemporal modeling approach

Spatial modeling of consumer response data has gained increased interest recently in the marketing literature. In this paper, we extend the (spatial) multi-scale model by incorporating both spatial and temporal dimensions in the dynamic multi-scale spatiotemporal modeling approach. Our empirical application with a US company’s catalog purchase data for the period 1997–2001 reveals a nested geographic market structure that spans geopolitical boundaries such as state borders. This structure identifies spatial clusters of consumers who exhibit similar spatiotemporal behavior, thus pointing to the importance of emergent geographic structure, emergent nested structure and dynamic patterns in multi-resolution methods. The multi-scale model also has better performance in estimation and prediction compared with several spatial and spatiotemporal models and uses a scalable and computationally efficient Markov chain Monte Carlo method that makes it suitable for analyzing large spatiotemporal consumer purchase datasets.

The Smart City Evolution in South Korea: Findings from Big Data Analytics

This study aims to investigate the effects of market commonality and resource similarity on price competition and the recursive consequences in the Korean lodging market. Price comparison among hotels in the same geographic market has been facilitated through the development of information technology, rendering little search cost of consumers. While the literature implies the heterogeneous price attack and response among hotels, a limited number of empirical researches focus on the asymmetric and recursive pattern in the competitive dynamics. This study empirically examines the price interactions in the Korean lodging market based on the theoretical framework of competitive price interactions and countervailing power. Demonstrating superiority to the spatial lag model and the ordinary least squares in the estimation, the results from spatial error model suggest that the hotels with longer operational history pose an asymmetric impact on the price of the newer hotels. The asymmetry is also found in chain hotels over the independent, further implying the possibility of predatory pricing. The findings of this study provide the evidence of a hierarchical structure in the price competition, with different countervailing power by the resources of the hotels. Theoretical and managerial implications are discussed, with suggestions for future study.

New Retail: Implications for Channel Choices under Competition

The Internet and online retailing has disrupted traditional brick-and-mortar retailing immensely. In recent years, a hybrid omnichannel structure referred to as “New Retail” that promises to take advantage of the positive aspects of online and physical channels has emerged within the industry, and some industry experts tout New Retail as the future of retailing. In this paper, we provide insights into competing firms' retail-channel choices among online channel, physical channel, and omnichannel. The online and physical channels could differ in terms of geographical market coverage, consumer shopping cost, and consumer valuation—an online channel can serve both city and remote (suburban) consumers whereas a physical channel may be able to serve only city consumers, and consumers have a lower shopping cost in the online channel than the physical channel but can have a higher valuation for either the physical or the online channel. We find that an equilibrium in which at least one firm operates the omnichannel emerges only when consumers have a higher valuation for the physical channel. Moreover, neither firm would operate only the online channel in this case. In contrast, when consumers have a higher valuation for the online channel than the physical channel, neither firm is likely to operate the omnichannel. The market and channel characteristics have nonuniform and counterintuitive impacts on firms' profits under different equilibria. For instance, neither increasing the differentiation between the channels within a firm nor increasing the differentiation between channels across firms necessarily benefits firms. Furthermore, an increase in the number of city consumers relative to the suburban consumers can hurt the firm that serves only city consumers. The tradeoffs among interfirm competition, market expansion, consumer segmentation, and intrafirm-cannibalization effects of firms' channel choices are the driving forces that lead to our findings.

Direct-to-Consumer Hospital Advertising and Domestic Medical Travel in the United States.

Expanding hospitals' geographic market area has been proposed as a means to increase competition and reduce healthcare costs. However, most patients in the United States receive care locally and are unlikely to seek out distant hospitals, effectively limiting competition to local markets. We hypothesize that mass media advertising can help overcome patients' reluctance to travel for elective medical care. We examined hospitals' advertising in distant markets to determine whether their expenditures predict the number of patients who travel to those hospitals.We obtained data on 2015 advertising expenditures by 273 U.S. academic medical centers from a market research firm. Regression models examined associations between hospitals' advertising expenditures and patient volume metrics: inpatients, encounters, and charges originating from distant markets where the medical centers advertised. Results showed that hospitals' advertising expenditures in distant markets were associated with higher numbers of inpatient admissions, patient visits, and charges from those markets. Compared to the distant markets where they advertised, the hometown markets of these hospitals are smaller with lower per capita income, suggesting hospitals are seeking incremental patient volume from more lucrative markets.Findings suggest that advertising may familiarize patients with distant facilities, encouraging domestic medical travel and enabling broader geographic competition among hospitals.

House price estimation using an eigenvector spatial filtering approach

PurposeNumerous geo-statistical methods have been developed to analyse the spatial dimension and composition of house prices. Despite these advances, spatial filtering remains an under-researched approach within house price studies. This paper aims to examine the spatial distribution of house prices using an eigenvector spatial filtering (ESF) procedure, to analyse the local variation and spatial heterogeneity.Design/methodology/approachUsing 2,664 sale transactions over the one year period Q3 2017 to Q3 2018, an eigenvector spatial filtering approach is applied to evaluate spatial patterns within the Belfast housing market. This method consists of using geographical coordinates to specify eigenvectors across geographic distance to determine a set of spatial filters. These convey spatial structures representative of different spatial scales and units. The filters are incorporated as predictors into regression analyses to alleviate spatial autocorrelation. This approach is intuitive, given that detection of autocorrelation in specific filters and within the regression residuals can be markers for exclusion or inclusion criteria.FindingsThe findings show both robust and effective estimator consistency and limited spatial dependency – culminating in accurately specified hedonic pricing models. The findings show that the spatial component alone explains 14.6 per cent of the variation in property value, whereas 77.6 per cent of the variation could be attributed to an interaction between the structural characteristics and the local market geography expressed by the filters. This methodological step reduced short-scale spatial dependency and residual autocorrelation resulting in increased model stability and reduced misspecification error.Originality/valueEigenvector-based spatial filtering is a less known but suitable statistical protocol that can be used to analyse house price patterns taking into account spatial autocorrelation at varying (different) spatial scales. This approach arguably provides a more insightful analysis of house prices by removing spatial autocorrelation both objectively and subjectively to produce reliable, yet understandable, regression models, which do not suffer from traditional challenges of serial dependence or spatial mis-specification. This approach offers property researchers and policymakers an intuitive but comprehensible approach for producing accurate price estimation models, which can be readily interpreted.

Boxing or golfing: a view of small business competition

The field of competitive dynamics has relied heavily on observations of large, visible firms while underestimating the nuances of small and medium-sized enterprises (SMEs). However, due to their size, resource endowments, and customer relations, SMEs might compete differently than large firms. This qualitative research, performed through semi-structured interviews, draws on managerial perceptions to examine the competitive dynamics of nine SMEs in a single geographic market. For comparison, we also interviewed three large firms in corresponding industries. Using the awareness–motivation–capability framework as our foundation, we observed that the competitive dynamics of SMEs differ from large firms in two key areas, competitor analysis and competitive interaction. Most notably, SMEs approach competitor analysis very informally and interweave the process with other activities. However, SMEs are very aware of the competitive environment although they downplay their attention to competition. This awareness does not necessarily motivate SMEs to compete in the classic sense of head-to-head competition with rivals. Instead, SMEs favor cooperation with competitors and focus their attention on serving their customers rather than on besting rivals.