Essays in Vertical Agreements and Consumer Behavior

Abstract

This thesis collects three independent essays and a literature review. Two of them relate to vertical agreements. The first essay explores a retailer's choice in allocating control rights over the decision of retail prices. Results show that retailers adopt a hybrid configuration as a middle ground between two extremes, where pricing decisions are delegated, for all products, either to retailer or manufacturers. The second essay investigates the make-it-or-license-it choice of a brand owner under the risk of moral hazard when licensing the extension product to a third party. Brand licensing emerges as an equilibrium choice under brand dilution (respectively, enhancement) when the consumer perceives a large (small) distance between the extension product and parent brand. The third essay explores the issue of rating bubbles within online feedback systems by means of a field experiment. The analysis found the presence of positive social influence bias, in that high ratings affect the individual rating behavior in a significant way. The last paper is accompanied by a thorough and deep review of the literature about the consequences of online user ratings on product sales/performance (economic dimension) and product adoption/rating behavior (behavioral dimension). The topic is increasingly investigated by academic researchers and industry professionals alike. This overview presents established results and insights as issues for future research.