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Testing the Double Jeopardy Loyalty Effect Using Discrete Choice Models

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  • José M. Labeaga
  • Mercedes Martos-Partal
  • Nora Lado

Abstract

This paper attempts to validate the double jeopardy loyalty effect in a utility framework using a discrete choice approach instead of the Dirichlet model. We specify brand choice and allow for differences in brand loyalty measures across brands in two different product categories. The discrete choice model formulations include a multinomial and a latent class multinomial logit model. Using ACNielsen household scanner panel data to estimate the models, we find that market share leaders enjoy higher purchasing loyalty than do lower market share brands. The results have relevant implications in terms of marketing mix decisions for brand managers.

Suggested Citation

  • José M. Labeaga & Mercedes Martos-Partal & Nora Lado, 2007. "Testing the Double Jeopardy Loyalty Effect Using Discrete Choice Models," Working Papers 2007-21, FEDEA.
  • Handle: RePEc:fda:fdaddt:2007-21
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    References listed on IDEAS

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    5. Peter Cramton & Joseph Tracy, 2003. "Unions, Bargaining and Strikes," Papers of Peter Cramton 02ubs, University of Maryland, Department of Economics - Peter Cramton, revised 05 Sep 2002.
    6. Gu, Wulong & Kuhn, Peter, 1998. "A Theory of Holdouts in Wage Bargaining," American Economic Review, American Economic Association, vol. 88(3), pages 428-449, June.
    7. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    8. Cramton, Peter C & Tracy, Joseph S, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," American Economic Review, American Economic Association, vol. 82(1), pages 100-121, March.
    9. Cramton, Peter C & Tracy, Joseph S, 1994. "Wage Bargaining with Time-Varying Threats," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 594-617, October.
    10. Grossman, Sanford J. & Perry, Motty, 1986. "Sequential bargaining under asymmetric information," Journal of Economic Theory, Elsevier, vol. 39(1), pages 120-154, June.
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    12. Anat R. Admati & Motty Perry, 1987. "Strategic Delay in Bargaining," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 345-364.
    13. Kennan, John, 1987. "The economics of strikes," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 19, pages 1091-1137 Elsevier.
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    Cited by:

    1. Steven D’Alessandro & Lester Johnson & David Gray & Leanne Carter, 2015. "Consumer satisfaction versus churn in the case of upgrades of 3G to 4G cell networks," Marketing Letters, Springer, vol. 26(4), pages 489-500, December.

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