This paper examines optimal product positioning strategies of asymmetric firms in the context of retail outlet locations in the fast food industry. The relationships between profits and product differentiation reveal that both McDonald's and Burger King are better off avoiding close competition if the market area is large enough. However, in small market areas, McDonald's would prefer to be located together with Burger King rather than have the two outlets be only a slight distance apart. In contrast, Burger King's profits always increase with greater differentiation. Offsetting these incentives is the desirability of locating centrally to appeal to the most customers. The equilibrium depends on the market's size. In small markets, McDonald's locates near the center of the market, and Burger King locates to the side of the market. In larger markets, McDonald's and Burger King choose locations on opposite sides of the market, although McDonald's locates closer to the optimal central location than Burger King. I also show that the role of price competition on product positioning is fundamentally different under asymmetric competition than under symmetric competition. Price competition unambiguously induces symmetric firms toward differentiation. In contrast, with asymmetric firms, price competition shifts Burger King's incentives toward locating closer to McDonald's, even while price competition increases McDonald's desire for differentiation. As a result, equilibrium locations with asymmetric firms are approximately the same, regardless of whether prices adjust with location.product positioning, pricing research, geographic competition, fast food

Marketing science models typically assume that responses of one entity (firm or consumer) are unrelated to responses of other entities. In contrast, models constructed using tools from spatial statistics allow for cross-sectional and longitudinal correlations among responses to be explicitly modeled by locating entities on some type of map. By generalizing the notion of a map to include demographic and psychometric representations, spatial models can capture a variety of effects (spatial lags, spatial autocorrelation, and spatial drift) that impact firm or consumer decision behavior. Marketing science applications of spatial models and important research opportunities are discussed. Copyright Springer Science + Business Media, Inc. 2005

The introduction of memory imperfections into models of economic decision making creates a natural role for anticipatory emotions. Their combination has striking behavioural implications. The paper first shows that agents can rationally select apparently dominated strategies. We consider Newcomb's Paradox and the Prisoners' Dilemma. We provide a resolution for Newcomb's Paradox and argue it requires the decision maker to ascribe only a tiny weight to anticipatory emotions. For some ranges of parameters, it is possible to obtain cooperation in the Prisoners' Dilemma with probability arbitrarily close to unity. The second half of the paper provides a theory of reminders. Copyright 2005 Royal Economic Society.

We combine COVID-19 case data with mobility data to estimate a modified susceptible-infected-recovered (SIR) model in the United States. In contrast to a standard SIR model, we find that the incidence of COVID-19 spread is concave in the number of infectious individuals, as would be expected if people have inter-related social networks. This concave shape has a significant impact on forecasted COVID-19 cases. In particular, our model forecasts that the number of COVID-19 cases would only have an exponential growth for a brief period at the beginning of the contagion event or right after a reopening, but would quickly settle into a prolonged period of time with stable, slightly declining levels of disease spread. This pattern is consistent with observed levels of COVID-19 cases in the US, but inconsistent with standard SIR modeling. We forecast rates of new cases for COVID-19 under different social distancing norms and find that if social distancing is eliminated there will be a massive increase in the cases of COVID-19.

We study behavior-based pricing (BBP) in a vertically differentiated model. Vertical differentiation is innately asymmetric because all customers prefer the higher-quality product when prices are equal. This asymmetry causes BBP to have different properties than symmetric horizontally differentiated models. We highlight two dimensions that affect the analysis: the role of quality-adjusted cost differences between the firms and the role of consumer discounting relative to firm discounting. In the second period, consistent with the prior literature, we find that there are conditions based on market shares and quality-adjusted costs under which either the low-quality firm or the high-quality firm—but not both—will reward its current customers with lower prices than it charges to new customers. We then consider whether these conditions can arise in a two-period equilibrium. We find that if consumers sufficiently discount the future periods, then firms at enough of a competitive disadvantage will reward their customers: i.e., the low-quality firm will reward its current customers if the quality-adjusted cost differential between the two firms is small, while the high-quality firm will reward its current customers if this cost differential is large. Conversely, we find that if consumers do not discount the future very much, then the firm at a competitive disadvantage (i.e., a low-quality firm competing against a low-cost high-quality firm, or a high-quality firm that has very high costs) can earn greater profits with BBP than without BBP, although there are cases where both firms may benefit from BBP. This paper was accepted by J. Miguel Villas-Boas, marketing.

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An empirical analysis of assortment similarities across U.S. supermarketsHwang, M.; Bronnenberg, Bart; Thomadsen, R. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policyIf you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. T his paper examines pairwise assortment similarities at U.S. supermarkets to understand how assortment composition and size are related to underlying factors that describe local store clientele, local competitive structure, and the retail outlets' characteristics. The top-selling items, which cumulatively make up 50% of sales, are sold at nearly every store, but other items are viewed as optional. We find that, within states, supermarkets owned by the same chain carry similar assortments and that the composition of their clientele and the presence of competing stores have effects on assortment similarity that are an order of magnitude smaller than ownership structure. In contrast, we find that, across states, supermarkets owned by the same chain do version their assortment. We explain this difference using extant work on the minimal efficient scale of supermarkets and on local demand effects. Furthermore, we investigate the distribution and role of regional brands. We find that regional brands are primarily distributed by small regional chains or independent stores. "Value" regional brands are primarily distributed by supermarket firms without store brands, whereas the distribution of "premium" regional brands is unrelated to the presence of store brands. We discuss our findings in the context of modeling assortment decisions and manufacturers designing distribution policies.

The author examines conditions under which one firm's product line expansion can cause all firms to be more profitable in horizontally differentiated markets. Although a firm's profits might be expected to decrease when a competitor expands its product line because the firm loses some sales to the new product, this intuition is incomplete because a competitor's product line expansion can also soften price competition. The author first provides an example using the Hotelling model that demonstrates the possibility and mechanism of profit-increasing competitor entry. He then presents conditions under which a competitor's product line expansion increases profits under the mixed-logit model. The study demonstrates that firms benefit from a rival's entry most when a moderate number of customers are unserved before the new-product introduction and when the new product is positioned such that both the rivals' products appeal to similar sets of customers. With regard to extensions, this study demonstrates that the result continues to hold when firms choose product attributes endogenously and that a manufacturer's profits can increase from a rival's product line expansion even when the firms sell through a retailer.