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An Economic Model for Popular Event Promotions

Author

Listed:
  • Sheng-Yeh, Wu
  • Guan-Ru, Chen
  • Ilia, Tetin

Abstract

This study provides a theoretic framework for price promotions on seasonal events and popular events, such as anniversary, Christmas, and World Soccer Cup. Firms engage in collective price promotions seems to contradict economic wisdom because promotions are less likely to stand out among competitors in popular events. In a rational expectations model, this study shows all players’ performance improve in the equilibrium. Furthermore, even less-famous goods benefit from collective price promotions in which the theoretic framework can provide a guideline to manufacturers and retailers.

Suggested Citation

  • Sheng-Yeh, Wu & Guan-Ru, Chen & Ilia, Tetin, 2022. "An Economic Model for Popular Event Promotions," Bulletin of Applied Economics, Risk Market Journals, vol. 9(2), pages 169-173.
    • Handle: RePEc:rmk:rmkbae:v:9:y:2022:i:2:p:169-173
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    References listed on IDEAS

    as
    1. Anuj Kumar & Yinliang (Ricky) Tan, 2015. "The Demand Effects of Joint Product Advertising in Online Videos," Management Science, INFORMS, vol. 61(8), pages 1921-1937, August.
    2. Karray, Salma, 2011. "Effectiveness of retail joint promotions under different channel structures," European Journal of Operational Research, Elsevier, vol. 210(3), pages 745-751, May.
    3. Parshakov, Petr & Naidenova, Iuliia & Barajas, Angel, 2020. "Spillover effect in promotion: Evidence from video game publishers and eSports tournaments," Journal of Business Research, Elsevier, vol. 118(C), pages 262-270.
    4. Admati, Anat R, 1985. "A Noisy Rational Expectations Equilibrium for Multi-asset Securities Markets," Econometrica, Econometric Society, vol. 53(3), pages 629-657, May.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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