University of Southern California

Anthony Dukes
Title
Mass-Media to Mass-Discounters
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With a mathematics and engineering background, I was always fascinated that by mathematically modeling physical phenomena we can improve our understanding of how the physical world functions. After taking my first economics class, I saw that mathematical modeling could also be applied to social behavior and lead to valuable insights about how society functions. This motivated me to enroll in a PhD program in economics. After learning that the average American is exposed to some 5000 advertising messages per day, I quickly became interested in questions related to the economics of advertising. My big question was – from an economic perspective is this excessive? Many economists seemed convinced that the free market provides more advertisements than is socially optimal. While this seemed intuitive, I felt they overlooked an important social benefit, namely, that most media content is supported by advertising spending. Radio, television, and much of the online content are provided at a low cost to consumers because of the revenue from advertising. My dissertation challenged the conventional economic thinking on advertising by identifying the huge benefit we obtain from commercially supported media.

It may be surprising that my research in advertising media led me to study the impact of big-box retailers, such as Wal-Mart and Target. But like commercial media, retailers are marketing intermediaries – firms that facilitate the marketing activities of other companies and the vehicle through which marketers reach consumers. This connection gave me the idea to ask whether big box retailers, despite their size and competitive challenge to conventional retailers, improve marketers’ ability to deliver their products into the hands of consumers. There has been a great deal of public controversy over this form of retailing, yet little in terms of rigorous research on the winners and losers from the growth of Wal-Mart and other mass retailers. I, along with research collaborators at other universities, learned that a powerful retailer can actually provide a benefit to their suppliers even if they are forced to lower their wholesale prices. If merchants, such as Wal-Mart, bring more efficient means of retailing to the market, they can keep prices low and sell more of their suppliers’ products to consumers. So, even if discount retailers squeeze suppliers’ wholesale margins, they can make it up by selling higher volume.

An exciting part of doing academic research is having the opportunity to generate new insights about such complicated, and sometimes controversial, issues in a rigorous way and free of influence by stakeholders. Being at USC-Marshall is particularly rewarding because I am surrounded by faculty who share the commitment to high quality research. This makes USC not only a stimulating environment to do research, but its intellectual reputation enables us to attract top students from all over the globe, which makes teaching a hugely rewarding experience.