Estimating loyalty and switching with an application to the automobile market
Article Abstract:
A brand switching model that explores customer choice in terms of past, present and substitute choices is introduced. This model characterizes the market as comprised of two categories of consumers: the 'Loyals' and the 'Shoppers.' Use of the model will yield estimates of the ratio between the two groups in various submarkets, measures of the submarkets' success in capturing Shoppers, and criteria for evaluating some of the market's competitive structures based on loyalty and shopping proportions. An empirical application of the model to the US automobile market offers several interesting conclusions pertaining to such issues as the American market's competitiveness as compared to that of foreign markets, the nature of competition between submarkets in terms of form, and loyalty and shopping as influenced by previous dealer experience.
Publication Name: Management Science
Subject: Business, general
ISSN: 0025-1909
Year: 1992
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Airline mergers and competition: an integration of stock and product price effects
Article Abstract:
Research on airfares argues that market power plays a significant role in airline mergers while studies on stock prices conclude that market power is not a prime determinant in horizontal mergers. To find clarification on these contrasting views, a study was conducted that combines the two lines of research by investigating the same set of airline mergers from a capital market perspective. It relates stock-market changes to product-market changes, thereby coming up with a dual market point of view. Potential sources of noise are removed by sampling airline mergers during the 1985-1988 timeframe when implementation of the antitrust policy was not strict. Results suggest that airline mergers lead to both greater market power and more efficient operations. Implications are discussed.
Publication Name: The Journal of Business
Subject: Business, general
ISSN: 0021-9398
Year: 1996
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