Promotion induced competitive effects: Two essays

This dissertation focuses on the empirical generalizations related to retailer promotions. Two essays are developed addressing the generalizations. The first essay addresses the contradiction in the calculations of primary and secondary demand effects. A mathematical proof is developed to show that under Nested Logit modeling, competitors' gain assumption is violated. An alternative explanation is provided to calculate the primary and secondary demand effects. The second essay focuses on the empirical generalization of the neighborhood price effect. The effects of share and quality in shaping the neighborhood price effect are hypothesized and tested. Further, based on the evidence that neighborhood price effect and asymmetric share effect generally go together and contradict the market power notion, a related hypothesis is tested. This essay brings out new potential empirical generalizations.