Search results

Although customer relationships transpire through a process of time, encounters and experience, few studies have examined the dynamics of service relationships. This paper aims to address this issue by examining the effect of experience on the association between relational benefits and relationship quality, and between relationship quality and loyalty.

Using a national sample of 376 service consumers and nine service industries, the study examines whether the impact of relationship benefits on perceptions of satisfaction, trust and commitment, and ultimately customer loyalty, differs significantly between novice and experienced customer cohorts.

The results indicate significant differences between novice and experienced cohorts. Specifically, the impact of confidence, social and special treatment benefits on perceptions of satisfaction, trust and commitment, and ultimately customer loyalty, differ significantly based on a customer's level of relationship experience.

The findings of this study have tactical and strategic implications for service firms, including effective customer asset management, resource allocation, and relationship strategy.

This study makes a significant new contribution to theory and practice.

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

We examine a central tenet of real option theory – whether real options influence managerial thresholds for investment. In contrast to prior studies that have focused on whether real options influence discrete investment decisions, our focus is on empirically isolating real options’ effects on thresholds. In particular, we examine the real options inherent in acquisition decisions. Our model posits that there are good reasons why we might expect there to be information asymmetry around the value of real options. Accordingly, if managers have unique information about growth options we might expect to observe them lowering their thresholds, perhaps to the point where they are willing to accept negative market returns. We further expect that the degree of information asymmetry for firm-specific growth options should be higher than for industry-specific growth options. Finally, we believe that managerial thresholds will be more prone to influence from growth options than deferment options. While thresholds are unobservable, we are able to isolate the effects of real options on acquisition thresholds by borrowing a method used originally in labor economics to isolate the determinants of reservation wages. Using a sample of over 28,000 acquisitions in the U.S., we find strong support for the model. These findings suggest that firms with low thresholds may choose to acquire despite comparatively low expected performance.

Many jurisdictions fine illegal cartels using penalty guidelines that presume an arbitrary 10% overcharge. This article surveys more than 700 published economic studies and judicial decisions that contain 2,041 quantitative estimates of overcharges of hard-core cartels. The primary findings are: (1) the median average long-run overcharge for all types of cartels over all time periods is 23.0%; (2) the mean average is at least 49%; (3) overcharges reached their zenith in 1891–1945 and have trended downward ever since; (4) 6% of the cartel episodes are zero; (5) median overcharges of international-membership cartels are 38% higher than those of domestic cartels; (6) convicted cartels are on average 19% more effective at raising prices as unpunished cartels; (7) bid-rigging conduct displays 25% lower markups than price-fixing cartels; (8) contemporary cartels targeted by class actions have higher overcharges; and (9) when cartels operate at peak effectiveness, price changes are 60–80% higher than the whole episode. Historical penalty guidelines aimed at optimally deterring cartels are likely to be too low.

In Sabah, Malaysia, illegal hunting has increased in recent years putting considerable pressure on large mammal populations. The causes for this phenomenon lie in increasing rural poverty, ineffective policies to regulate hunting, as well as a ready market for many wildlife products in the Chinese medicine markets. This paper examines how Community-Based Ecotourism has some potential to be used as a tool to reducing poaching using the Tidong community in Sabah as a case study. The key finding is that successful conservation outcomes for Community-Based Ecotourism projects are only sustainable over the long run if projects are structured to ensure that the local community is able to continue effective management once sponsoring organizations hand over control and that revenue from tourism does not decline. If tourist revenue declines communities may be forced to revert to previous practices reversing any initial conservation gains.