Estimating multiple-discrete choice models: an application to computerization returns.
Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of ea...
| Published in: | Review of Economic Studies no. 227; pp. 423 - 447 |
|---|---|
| Main Author: | |
| Format: | Article |
| Published: |
Oxford University Press / UK
2) no227 (April 1999
|
| Subjects: | |
| Online Access: | View this record in EBSCOhost |
| Summary: | Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2.2% gain in the estimated user surplus. Reprinted by permission of Review of Economic Studies Ltd. |
|---|