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Marketing Innovation

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  • Yongmin Chen

Abstract

"This paper provides an economic analysis of marketing innovation. A dynamic duopoly model is developed to study two forms of marketing innovation: Gamma, which allows a firm to acquire consumer information effectively; and sigma, which reduces consumer transaction costs. The incentives and effects of marketing innovation differ markedly from those of product or process innovations. Although Gamma benefits the innovating firm, it hurts some consumers; and, while sigma benefits all consumers, it may or may not benefit the innovating firm. Increased competition intensity reduces the value of Gamma but increases the value of sigma. The private incentive is too high for Gamma but too low for sigma." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 15 (2006)
Issue (Month): 1 (03)
Pages: 101-123

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Handle: RePEc:bla:jemstr:v:15:y:2006:i:1:p:101-123

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Cited by:
  1. Ramón Faulí-Oller & Lluís Bru & Joel Sandonís, 2006. "Partial Price Discrimination By An Upstream Monopolist," Working Papers. Serie AD 2006-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. Chen, Yongmin & Feenstra, Robert C., 2008. "Buyer investment, export variety, and intrafirm trade," European Economic Review, Elsevier, vol. 52(8), pages 1313-1337, November.
  3. Bernhardt, Dan & Liu, Qihong & Serfes, Konstantinos, 2007. "Product customization," European Economic Review, Elsevier, vol. 51(6), pages 1396-1422, August.
  4. Robert C. Feenstra & Yongmin Chen, 2005. "Buyer Investment, Product Variety, and Intrafirm Trade," NBER Working Papers 11752, National Bureau of Economic Research, Inc.
  5. Liu, Qihong & Serfes, Konstantinos, 2006. "Customer information sharing among rival firms," European Economic Review, Elsevier, vol. 50(6), pages 1571-1600, August.
  6. Curtis Taylor & Liad Wagman, 2008. "Who Benefits From Online Privacy?," Working Papers 08-26, NET Institute.
  7. Loginova, Oksana & Wang, X. Henry, 2013. "Mass customization in an endogenous-timing game with vertical differentiation," Economic Modelling, Elsevier, vol. 33(C), pages 164-173.

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