• Asia Marketing Journal
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• v.14 no.1
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• pp.83-98
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• 2012

In a market where new and used cars are competing with each other, we would run the risk of obtaining biased estimates of cross elasticity between them if we focus on only new cars or on only used cars. Unfortunately, most of previous studies on the automobile industry have focused on only new car models without taking into account the effect of used cars' pricing policy on new cars' market shares and vice versa, resulting in inadequate prediction of reactive pricing in response to competitors' rebate or price discount. However, there are some exceptions. Purohit (1992) and Sullivan (1990) looked into both new and used car markets at the same time to examine the effect of new car model launching on the used car prices. But their studies have some limitations in that they employed the average used car prices reported in NADA Used Car Guide instead of actual transaction prices. Some of the conflicting results may be due to this problem in the data. Park (1998) recognized this problem and used the actual prices in his study. His work is notable in that he investigated the qualitative effect of new car model launching on the pricing policy of the used car in terms of reinforcement of brand equity. The current work also used the actual price like Park (1998) but the quantitative aspect of competitive price promotion between new and used cars of the same model was explored. In this study, I develop a model that assumes that the cross elasticity between new and used cars of the same model is higher than those amongst new cars and used cars of the different model. Specifically, I apply the nested logit model that assumes the car model choice at the first stage and the choice between new and used cars at the second stage. This proposed model is compared to the IIA (Independence of Irrelevant Alternatives) model that assumes that there is no decision hierarchy but that new and used cars of the different model are all substitutable at the first stage. The data for this study are drawn from Power Information Network (PIN), an affiliate of J.D. Power and Associates. PIN collects sales transaction data from a sample of dealerships in the major metropolitan areas in the U.S. These are retail transactions, i.e., sales or leases to final consumers, excluding fleet sales and including both new car and used car sales. Each observation in the PIN database contains the transaction date, the manufacturer, model year, make, model, trim and other car information, the transaction price, consumer rebates, the interest rate, term, amount financed (when the vehicle is financed or leased), etc. I used data for the compact cars sold during the period January 2009- June 2009. The new and used cars of the top nine selling models are included in the study: Mazda 3, Honda Civic, Chevrolet Cobalt, Toyota Corolla, Hyundai Elantra, Ford Focus, Volkswagen Jetta, Nissan Sentra, and Kia Spectra. These models in the study accounted for 87% of category unit sales. Empirical application of the nested logit model showed that the proposed model outperformed the IIA (Independence of Irrelevant Alternatives) model in both calibration and holdout samples. The other comparison model that assumes choice between new and used cars at the first stage and car model choice at the second stage turned out to be mis-specfied since the dissimilarity parameter (i.e., inclusive or categroy value parameter) was estimated to be greater than 1. Post hoc analysis based on estimated parameters was conducted employing the modified Lanczo's iterative method. This method is intuitively appealing. For example, suppose a new car offers a certain amount of rebate and gains market share at first. In response to this rebate, a used car of the same model keeps decreasing price until it regains the lost market share to maintain the status quo. The new car settle down to a lowered market share due to the used car's reaction. The method enables us to find the amount of price discount to main the status quo and equilibrium market shares of the new and used cars. In the first simulation, I used Jetta as a focal brand to see how its new and used cars set prices, rebates or APR interactively assuming that reactive cars respond to price promotion to maintain the status quo. The simulation results showed that the IIA model underestimates cross elasticities, resulting in suggesting less aggressive used car price discount in response to new cars' rebate than the proposed nested logit model. In the second simulation, I used Elantra to reconfirm the result for Jetta and came to the same conclusion. In the third simulation, I had Corolla offer $1,000 rebate to see what could be the best response for Elantra's new and used cars. Interestingly, Elantra's used car could maintain the status quo by offering lower price discount ($160) than the new car ($205). In the future research, we might want to explore the plausibility of the alternative nested logit model. For example, the NUB model that assumes choice between new and used cars at the first stage and brand choice at the second stage could be a possibility even though it was rejected in the current study because of mis-specification (A dissimilarity parameter turned out to be higher than 1). The NUB model may have been rejected due to true mis-specification or data structure transmitted from a typical car dealership. In a typical car dealership, both new and used cars of the same model are displayed. Because of this fact, the BNU model that assumes brand choice at the first stage and choice between new and used cars at the second stage may have been favored in the current study since customers first choose a dealership (brand) then choose between new and used cars given this market environment. However, suppose there are dealerships that carry both new and used cars of various models, then the NUB model might fit the data as well as the BNU model. Which model is a better description of the data is an empirical question. In addition, it would be interesting to test a probabilistic mixture model of the BNU and NUB on a new data set.

• Journal of Christian Education in Korea
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• v.71
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• pp.305-340
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• 2022

This study was started to suggest the direction of Christian educational development to revitalize North Korea's 'education' research. Since the two Koreas have experienced heterogeneity in almost all elements of society, such as politics, economy, society, culture, and education, during the period of division in 1977, true unification depends on laying the foundation for social integration that can overcome the sense of heterogeneity between the two Koreas. This is why North Korea's "education" research is needed. Education is the foundation for transferring culture and history, and for bringing about the survival, transformation, and community of society and since it is the mission of Korean churches and Christian educators to establish the direction of North Korean "education" research, North Korean "education" research is very important. Despite this importance, 'North Korean research' in the field of Christian education has not been properly conducted. Research on the "Christian Unification Education Program" that can be used in churches is actively taking place, but research on the macro level of presenting post-unification education blueprints is rare. This study was started to suggest the direction of Christian educational development to revitalize North Korea's 'education' research. For the study, the characteristics of 'North Korea Research' were analyzed according to generational classification. As a result of the study, recent research on North Korea has been expanding in research topics and methodologies, and recent studies have been differentiated into microscopic studies that deviate from existing research trends at a macro level and view North Korea's daily life. The characteristics of 'North Korean education research' are summarized by period. The research on North Korean education, which began in earnest in the 1970s, was divided into the period of start(70s), transition(80s), leap(90s), expansion(2000s), and development(2010s~). and research characteristics for each period were analyzed. Through this, early North Korean education research was also conducted in the policy aspect of the country, and the characteristics of political and social studies were strong, but recent studies have confirmed that the subjects and contents are diversifying. Based on these studies, the pending issues and issues of North Korean education research in the field of Christian education were analyzed. The study of North Korea in the field of Christian education, which began in the 1980s, has been conducted in the engineering aspect of 'development of unification education programs for churches'. However, studies on Christian unification education and North Korean education itself, which can be used in public education sites including Christian schools, have yet to be sufficient. Nevertheless, the diversification of research in the field of Christian education can be evaluated as a positive change. Based on these studies, it was proposed to establish a de-ideological research foundation, secure primary research data(Raw Data), activate research topics and research methodologies, and strengthen research capabilities in the direction of development to revitalize North Korean research in the field of Christian education. I hope this study will trigger various follow-up studies and help Korean churches that must achieve unification.