utility covariances and context effects in conjoint mnp models experimental conjoint choice analysis is among the most frequently used methods for measuring and analyzing consumer preferences the data from such experiments have been typically analyzed with the multinomial logit mnl model however there are several problems associated with the standard mnl model because it is based on the assumption that the error terms of the underlying random utilities are independent across alternatives choice sets and subjects the multinomial probit model mnp is well known to alleviate this assumption of independence of the error terms accounting for covariances in utilities in modeling choice experiments with the mnp is important because variation of the coefficients in the choice model may occur due to context effects previous research has shown that subjects utilities for alternatives depend on the choice context that is the particular set of alternatives evaluated simonson and tversky s tradeoff contrast principle describes the effect of the choice context on attribute importance and patterns of choice they distinguish local contrast effects which are caused by the alternatives in the offered set only and background contrast effects which are due to the influence of alternatives previously considered in choice experiments these effects are hypothesized to cause correlations in the utilities of alternatives within and across choice sets respectively the purpose of this study is to develop an mnp model for conjoint choice experiments this model is important for a more detailed study of choice patterns in those experiments in developing the mnp model for conjoint choice experiments several hurdles need to be taken related to the identification of the model and to the prediction of holdout profiles to overcome those problems we propose a random coefficients rc model that assumes a multivariate normal distribution of the regression coefficients with a rank one factor structure on the covariance matrix of these regression coefficients the parameters in this covariance matrix can be used to identify which attributes and levels of attributes are potentional sources of dependencies between the alternatives and choice sets in a conjoint choice experiment we present several versions of this model moreover for each of these models we allow utilities to be either correlated or independent across choice sets the independent probit ip model is used as a benchmark given the dimensionality of the integrations involved in computing the choice probabilities the models are estimated with simulated likelihood where simulations are used to approximate the integrals involved in the choice probabilities we apply and compare the models in two conjoint choice experiments in both applications the random coefficients mnp model that allows choices in different choice sets to be correlated rc displays superior fit and predictive validity compared with all other models we hypothesize that the difference in fit occurs because the rc model accommodates correlations among choice sets that are caused by background contrast effects whereas the model that treats choice sets as independent irc accounts for local contrast effects only the irc model shows superior model fit compared with the ip model but its predictions are worse than those of the ip model we find differences in the importance of local and background contrast effects for choice sets containing different numbers of alternatives the background contrast effect may be stronger for smaller choice sets whereas the local contrast effect may be stronger for bigger choice sets we illustrate the differences in simulated market shares that are obtained from the rc irc and ip models in three hypothetical situations product modification product line extension and the introduction of a me too brand in all of those situations substantially different market shares are predicted by the three models which illustrates the extent to which erroneous predictions may be obtained from the misspecified irc and ip models

trading with conditions the effect of sanitary and phytosanitary measures on the agricultural exports from low income countries market access for agricultural products is increasingly determined by capability to comply with a wide array of regulatory measures from a trade perspective one of the most important aspects of such regulatory measures is their potential distortionary effect as their cost of compliance is often asymmetrical across countries this paper investigates the effect of the european union s sanitary and phytosanitary sps measures on the exports from low income countries this study finds that sps measures result in relatively higher burden for low income countries but that membership in deep trade agreements seems to reduce the difficulties related to compliance with sps measures these results are consistent with the hypothesis that while many middle and high income countries have the internal capacity to comply with sps measures most low income countries do not

corruption a review as is increasingly recognised in academic literature and by international organisations corruption acts as a major deterrent to growth and development the aim of this survey is to organise and summarise existing theoretical and empirical work on corruption with a view to identifying opportunities for further research the paper begins with a brief overview of key definitions of corruption and then turns to a review of the factors that favour or deter the growth of corruption together with a brief look at related models this is followed by an examination of the consequences of corruption for society and the consideration of measures that might help to reduce corruption the paper ends with suggestions for future research and includes summaries of data sources and key variables for use in this research

competitive maps the structure underlying asymmetric cross elasticities a special case of three mode factor analysis is used to portray the systematic structure underlying asymmetric cross elasticities for a broad class of market share attraction models analysis of the variation over retail outlets and weeks reveals competitive patterns corresponding to sales for the major brands in the market as well as patterns reflecting shelf price competition analysis of the brand domain results in a joint space one set of brand positions portrays how brands exert influence over the competition the other set of points portrays how brands are influenced by others the interset distances angles provide direct measures of competitive pressures maps are formed as spatial representations of each of the competitive patterns discovered

a factor analytic probit model for representing the market structure in panel data internal market structure analysis infers both brand attributes and consumer preferences for those attributes from preference or choice data the authors exploit a new method for estimating probit models from panel data to infer market structures that can be displayed in few dimensions even though the model can represent every possible vector of purchase probabilities

the impact of regulatory heterogeneity on agri food trade we estimate the impact of regulatory heterogeneity on agri food trade using a gravity analysis that relies on detailed data on non tariff measures ntms collected by the ntm impact project the data cover a broad range of import requirements for agricultural and food products for the eu and nine of its major trade partners we find that trade is significantly reduced when importing countries have stricter maximum residue limits mrls for plant products than exporting countries for most other measures due to their qualitative nature we were unable to infer whether the importer has stricter standards relative to the exporter and we do not find a robust relationship between these measures and trade our findings suggest that at least for some import standards harmonising regulations will increase trade we also conclude that tariff reductions remain an effective means to increase trade even when ntms abound

a probabilistic choice model for market segmentation and elasticity structure marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching though the approach is useful it typically ignores the destabilizing

causes and effects of corruption what has past decade s empirical research taught us a survey corruption has fierce impacts on economic and societal development and is subject to a vast range of institutional jurisdictional societal and economic conditions it is this paper s aim to provide a reassessment and a comprehensive state of the art survey of existing literature on corruption and its causes and effects a particularly strong focus is put on presenting and discussing insights resulting from empirical research and contrasting recent with older findings

corruption and corruptibility summary the expressed norms and values of both citizens and street level officials explicitly condemn the giving or taking of bribes however citizens respond to extortion by officials and officials respond to temptation by clients this paper is based on over 6 000 interviews with the public and over 1 300 with street level officials in four postcommunist countries the czech republic slovakia bulgaria and ukraine who were questioned about i their values ii their hypothetical conditional behavior if exposed to extortion or temptation iii their personal experience of extortion or temptation and iv their actual behavior with respect to bribes

the impact of regulations on agricultural trade evidence from the sps and tbt agreements according to world trade organization rules countries may adopt regulations under the agreements on sanitary and phyto sanitary sps and technical barriers to trade tbt we analyze the structure of these measures in agricultural trade the inventory approach suggests that european countries have among the lowest coverage ratios of all oecd countries using a gravity equation we also estimate their stringency our results suggest that they significantly reduce developing countries exports to oecd countries but do not affect trade between oecd members furthermore european imports are more negatively influenced by sps and tbts than imports of other oecd countries

decision making under uncertainty capturing dynamic brand choice processes in turbulent consumer goods markets we construct two models of the behavior of consumers in an environment where there is uncertainty about brand attributes in our models both usage experience and advertising exposure give consumers noisy signals about brand attributes consumers use these signals to update their expectations of brand attributes in a bayesian manner the two models are 1 a dynamic model with immediate utility maximization and 2 a dynamic forward looking model in which consumers maximize the expected present value of utility over a planning horizon given this theoretical framework we derive from the bayesian learning framework how brand choice probabilities depend on past usage experience and advertising exposures we then form likelihood functions for the models and estimate them on nielsen scanner data for detergent we find that the functional forms for experience and advertising effects that we derive from the bayesian learning framework fit the data very well relative to flexible ad hoc functional forms such as exponential smoothing and also perform better at out of sample prediction another finding is that in the context of consumer learning of product attributes although the forward looking model fits the data statistically better at conventional significance levels both models produce similar parameter estimates and policy implications our estimates indicate that consumers are risk averse with respect to variation in brand attributes which discourages them from buying unfamiliar brands using the estimated behavioral models we perform various scenario evaluations to find how changes in marketing strategy affect brand choice both in the short and long run a key finding obtained from the policy experiments is that advertising intensity has only weak short run effects but a strong cumulative effect in the long run the substantive content of the paper is potentially of interest to academics in marketing economics and decision sciences as well as product managers marketing research managers and analysts interested in studying the effectiveness of marketing mix strategies our paper will be of particular interest to those interested in the long run effects of advertising note that our estimation strategy requires us to specify explicit behavioral models of consumer choice behavior derive the implied relationships among choice probabilities past purchases and marketing mix variables and then estimate the behavioral parameters of each model such an estimation strategy is referred to as structural estimation and econometric models that are based explicitly on the consumer s maximization problem and whose parameters are parameters of the consumers utility functions or of their constraints are referred to as structural models a key benefit of the structural approach is its potential usefulness for policy evaluation the parameters of structural models are invariant to policy that is they do not change due to a change in the policy in contrast the parameters of reduced form brand choice models are in general functions of marketing strategy variables e g consumer response to price may depend on pricing policy as a result the predictions of reduced form models for the outcomes of policy experiments may be unreliable because in making the prediction one must assume that the model parameters are unaffected by the policy change since the agents in our models choose among many alternative brands their choice probabilities take the form of higher order integrals we employ monte carlo methods to approximate these integrals and estimate our models using simulated maximum likelihood estimation of the dynamic forward looking model also requires that a dynamic programming problem be solved in order to form the likelihood function for this we use a new approximation method based on simulation and interpolation techniques these estimation techniques may be of interest to researchers and policy makers in many fields where dynamic choice among discrete alternatives is important such as marketing decision sciences labor and health economics and industrial organization

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

choice map inferring a product market map from panel data this paper describes choice map a model that infers a product market map from panel data choice map is a stochastic brand choice model a random utility quantal choice model and a multidimensional scaling procedure choice map combines the parsimony of stochastic choice models the rationale of random utility models and the ability of multidimensional scaling procedures to simultaneously infer both brand positions and consumer preferences from preference choice data choice map assumes that consumers have stationary purchase probabilities for the observational period which makes the model best suited to frequently bought mature product categories neither experimental nor survey data are required traditional mapping methods that scale such data may not yield the same structure for low involvement products as will a procedure like choice map that scales behavioral data choice map s descriptive and predictive validity exceeds that of an alternative stochastic brand choice model the dirichlet multinomial for a test data set

a unified approach to identifying estimating and testing demand structures with aggregate scanner data a one to one map between a specific demand structure and a restricted cross elasticity matrix is developed and tested using a random utility model the resulting demand structure can be used to evaluate a firm s ability to differentiate its products and can help determine if demand is characterized by factors that are easy to change similar brands are assumed to share common attributes that are stochastically evaluated by the consumer resulting in a random utility model with correlated errors the map results in more precise cross elasticity estimates and can be used to both identify and test possible structures

estimation of latent class models with heterogeneous choice probabilities an application to market structuring recently grover and srinivasan developed a latent class based approach to analyze market structure by using brand switching data the authors provide an iterative maximum likelihood procedure for

discrete choice models with multiple unobserved choice characteristics since the pioneering work by daniel mcfadden utility maximization based multinomial response models have become important tools of empirical researchers various generalizations of these models have been developed to allow for unobserved heterogeneity in taste parameters and choice characteristics here we investigate how rich a specification of the unobserved components is needed to rationalize arbitrary choice patterns in settings with many individual decision makers multiple markets and large choice sets we find that if one restricts the utility function to be monotone in the unobserved choice characteristics then up to two unobserved choice characteristics may be needed to rationalize the choices

an empirical investigation of private label supply by national label producers private labels pls are ubiquitous in several categories including groceries apparel and appliances however existing empirical work has not examined the differential impact of various upstream supply arrangements for pl products or the strategic motives for pl supply to do so requires one to model the interaction between private and national label nl products both upstream and downstream while accounting for strategic behavior on the part of manufacturers and retailers and retaining essential differences between nl and pl products we build a model that satisfies these requirements and lets us answer our two research questions first can an nl firm profit from being an outsourced pl supplier second what are the upstream and downstream impacts of different pl supply arrangements we answer these questions by modeling private labels as homogenous products at wholesale but as differentiated products at retail in contrast national label products are differentiated at both wholesale and retail levels using structural model estimates for fluid milk in a major metropolitan area we conduct three counterfactual experiments we find that both nl producers and retailers profit from adding private labels we also find that a vertically integrated supply of pl leads to lower prices for end consumers

estimating a multinomial probit model of brand choice using the method of simulated moments the multinomial probit model of brand choice is theoretically appealing for marketing applications as it is free from the independence of irrelevant alternatives property of the multinomial logit model however difficulties in estimation have restricted its widespread use in marketing this paper presents an application of the method of simulated moments a new methodology that enables easy estimation of probit models with a large number of alternatives in the choice set we describe the theoretical development of the technique and using pseudo simulated data conduct numerical experiments to compare the method with existing techniques for estimating probit models using the scanner panel data on the purchases of catsup we provide an empirical application of the method of simulated moments to the estimation of the parameters of a multinomial probit model estimating the covariance structure associated with the underlying latent variable probit model enables us to identify broad patterns of similarities across alternatives it also enables us to derive a pairwise similarity matrix across choice alternatives which when input into a multi dimensional scaling routine provides us with a graphical representation of competitive structure in the catsup market for completeness we compare the substantive implications for the effects of marketing variables obtained from the multinomial probit model with those obtained from models in the extant marketing literature

food safety issues trade and wto rules a developing country perspective the sps agreement and the related wto dispute settlement mechanism are an important first step in strengthening the global trade architecture bringing in greater transparency and orderly conditions to world food trade however implementation of the new trade rules has turned out to be a more complex task than the traditional market access issues handled by the wto several factors including inadequate financial and technical resources have constrained devel oping countries from becoming effective participants in the implementation process and there is widespread suspicion that sps regulations are being used as hidden protectionist devices by developed countries however despite all the problems some developing countries have been quite successful in penetrating developed country food markets they have done so by accepting the consumer preferences and standards in quality sensitive high income markets and implementing domestic supply side measures while making full use of available international assistance initiatives developing countries should view the task of complying with sps standards not just as a barrier but also as an opportunity to upgrade quality standards and market sophistication in the food export sector

practice prize paper category optimizer a dynamic assortment new product introduction mix optimization and demand planning system the purpose of this paper is to describe the implementation of a category management tool known as category optimizer at foster s wine estates americas for one of its brands the beringer california collection foster s was facing a common management problem harnessing its portfolio of beringer california collection wines to increase profitability improve its competitive position and defend against a disruptive new entrant in the u s wine market called yellow tail category optimizer combines the parsimony of an internal market structure with the advances that have been made in assortment planning in operations research assortment and stock keeping unit level modeling mixed logits and the marketing literature on the perceptions of variety of assortment to develop and estimate a model on readily available store scanner data the model subsequently uses these results to inform strategic and tactical decision making this approach led to recommendations that initially seemed counterintuitive the normal response would be for foster s to consider lowering prices to maintain share and volume a strategy not inconsistent with many of the recommendations of past models however considering the additional degrees of freedom that a product range offered for defense we demonstrated that a combination of price increases together with the introduction of a volume flanker product in a new channel would improve profits increase revenue and protect and enhance market share these were successfully implemented in early 2008 earning rich dividends for the company increasing profitability by 70 revenue by 3 and earnings before interest and taxes by 8 5 and having a positive impact on its brand ranking in fact in 2008 it debuted as sixth among the international wine brands it also managed to play an important role in deposing yellow tail the market share leader from its dominant position we conclude the paper by providing examples of other companies where this approach has also been successfully implemented and by discussing some avenues for future research

practice prize reports the practice prize reports consist of one article with two parts as follows sinha ashish j jeffrey inman yantao wang joonwook park attribute drivers a factor analytic choice map approach for understanding choices among skus and tellis gerard j rajesh k chandy deborah macinnis pattana thaivanich modeling the microeffects of television advertising which ad works when where for how long and why

treating zero brand sales observations in choice model estimation consequences and potential remedies abstract this research focuses on the consequences of and potential remedies for incorporating zero brand sales observations when calibrating choice models on the basis of household panel data as the authors show both analytically and empirically including or excluding zero brand sales observations can bias price elasticities even in cases in which the data are generated by a multinomial logit model the authors show that an appropriate choice of a model form i e specification is influenced by the incidence of missingness and the mechanism presumed to be causing a brand to have no purchases in a given store week the authors propose two model forms that may perform well in the presence of zero brand sales observations and investigate their relative performance on the basis of simulated data and two household panel data sets

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

the multifaceted impact of corruption on international trade the purpose of this paper is to perform a detailed examination of corruption effects on trade based on corruption characteristics known to affect economic exchange within the corruption research field these characteristics are the level prevalence customs location function and predictability of corruption the multifaceted corruption impact on trade is empirically examined using a corruption augmented gravity equation the equation is estimated using a heckman version of a gmm instrumental variable method our results provide strong evidence of that import flows vary systematically with the investigated corruption characteristics and enable the identification of channels through which corruption affects international trade the empirical investigation clearly indicates the need to examine the multifaceted role of corruption to properly assess the trade effects of corruption

institutional quality and international trade institutions quality of contract enforcement property rights shareholder protection and the like have received a great deal of attention in recent years yet trade theory has not considered the implications of institutional differences beyond treating them simply as different technologies or taxes the purpose of this paper is twofold first we propose a simple model of international trade in which institutional differences are modeled within the framework of incomplete contracts we show that doing so reverses many of the conclusions obtained by equating institutions with productivity institutional differences as a source of comparative advantage imply among other things that the less developed country may not gain from trade and factor prices may actually diverge as a result of trade second we test empirically whether institutions act as a source of trade using data on us imports disaggregated by country and industry the empirical results provide evidence of institutional content of trade institutional differences are an important determinant of trade flows

modeling heterogeneity and state dependence in consumer choice behavior in frequently purchased consumer goods markets consumer brand choices exhibit substantial persistence across purchase occasions in this article i estimate a choice model that admits of both heterogeneity in preferences and true state dependence as sources of this persistence using nielsen scanner data on ketchup i find evidence for true state dependence in the choice process even after controlling for a rich heterogeneity structure simulation of the model indicates that the long term effect of a promotion induced purchase on future purchase probabilities is positive but small

predicting competitive response to a major policy change combining game theoretic and empirical analyses this research uses procter gamble s value pricing initiative as a context for testing whether actual competitor and retailer response to a major policy change can be predicted using a game theoretic model we first estimate demand functions for p g and competitor brands from the period before value pricing was initiated we then formulate a dynamic manufacturer retailer stackelberg model that includes p g a national brand competitor and a retailer the model takes p g s move as given and prescribes the price and promotion response of the competitors and the retailer we substitute the estimated demand parameters into the model to obtain prescriptions for each competitor and the retailer and see whether these prescriptions are related to the actual response we find that the dynamic game theoretic model calibrated with empirical estimates of demand parameters has significant predictive power we also test the predictive power of two benchmark models the first is based on the reaction function approach of leeflang and wittink leeflang peter s h wittink dick r 1992 diagnosing competitive reactions using aggregated scanner data internat j res marketing9 39 57 and the second is a simplification of our dynamic model where the retailer is not strategic the dynamic game theoretic model performs better than either benchmark

technical regulations and specialization in international trade abstract it is widely acknowledged that while technical regulations can improve welfare and facilitate markets they can also impede trade the trade impeding effects of technical regulations are especially worrisome for developing countries they frequently lack the human and capital resources necessary to satisfy technical measures and thus are more likely to be excluded from markets by technical measures this paper uses highly disaggregated us data on agricultural mining and manufacturing imports to examine the impact of technical regulations on trade patterns using instrumental variables estimation to correct for the potential endogeneity of technical regulations the analysis suggests that technical regulations substantially impinge on poor countries exports their weaker capacities to satisfy technical regulations lead them to specialize away from industries with heavier regulatory burdens

understanding developing country strategic responses to the enhancement of food safety standards this paper explores the competing concepts of standards as barriers and standards as catalysts in the context of food safety standards in international trade in agricultural and food products through a review of existing evidence of the impact of food safety standards on developing country exports of agricultural and food products and the results of a series of country and product specific case studies it is suggested that food safety standards can act as both a barrier to trade and the basis of competitive positioning for developing countries in international markets this suggests that broad conclusions about the trade effects of food safety standards on developing countries are problematic rather the level and ways in which agricultural and food exports are impacted can be product country standard and even firm specific

do markets and trade help or hurt the global food system adapt to climate change rapidly expanding global trade in the past three decades has lifted millions out of people out of poverty trade has also reduced manufacturing wages in high income countries and made entire industries uncompetitive in some communities giving rise to nationalist politics that seek to stop or reverse further trade expansion in the united states and europe given complex and uncertain political support for trade how might changes in trade policy affect the global food system s ability to adapt to climate change here we argue that we can best understand food security in a changing climate as a double exposure the exposure of people and processes to both economic and climate related shocks and stressors trade can help us adapt to climate change or not if trade restrictions proliferate double exposure to both a rapidly changing climate and volatile markets will likely jeopardize the food security of millions a changing climate will present both opportunities and challenges for the global food system and adapting to its many impacts will affect food availability food access food utilization and food security stability for the poorest people across the world global trade can continue to play a central role in assuring that global food system adapts to a changing climate this potential will only be realized however if trade is managed in ways that maximize the benefits of broadened access to new markets while minimizing the risks of increased exposure to international competition and market volatility for regions like africa for example enhanced transportation networks combined with greater national reserves of cash and enhanced social safety nets could reduce the impact of double exposure on food security

endogeneity and heterogeneity in a probit demand model estimation using aggregate data two issues that have become increasingly important while estimating the parameters of aggregate demand functions to study firm behavior are theendogeneity of marketing activities typically price andheterogeneity across consumers in the market under consideration ignoring these issues in the estimation of the demand function parameters can lead to biased and inconsistent estimates for the effects of marketing activities endogeneity and heterogeneity have achieved prominence in large measure because of the increasing popularity of logit models to characterize demand functions usingaggregate data the logit model accounts for purchase incidence and brand choice by including a no purchase alternative in the consumer s choice set this allows for category sales to change as a function of the marketing activities of brands in the category there are three issues with using the logit model with the no purchase option to characterize demand when studying competitive interactions among firms 1 the marketing literature dealing with brand choice behavior at the consumer level has found that the iia restriction is not appropriate as each brand in the choice set is more similar to some brands than it is to others 2 studies have found that the purchase incidence decision is distinct from the brand choice decision hence it may not be appropriate to model the no purchase decision as just another alternative in the choice set with the iia restriction holding across all brands and the no purchase option 3 even if the distinction between the purchase incidence and brand choice decisions is accounted for via for example a nested logit specification accounting for the purchase incidence decision with aggregate data requires assumptions for computing the share of the no purchase alternative which is otherwise unobserved in this paper we propose a probit model as an alternative to the logit model to specify the aggregate demand functions of firms competing in oligopoly markets the probit model avoids the iia property that affects the logit model at the individual consumer level furthermore the probit model can naturally account for the distinction between the purchase incidence and brand choice decisions due to the general covariance structure assumed for the utilities of the alternatives we demonstrate how the parameters of the proposed model can be estimated using aggregate time series data from a product market in the estimation we account for the endogeneity of marketing variables as well as for heterogeneity across consumers our results indicate that both endogeneity as well as heterogeneity need to be accounted for even after allowing for a non iia specification at the individual consumer level specific to our data we also find that ignoring endogeneity has a bigger impact on the estimated price elasticities than ignoring the effects of heterogeneity a comparison of the elasticities obtained from the probit model with those from the corresponding logit specification indicates that therange of elasticities obtained from the probit model across brands is larger than that obtained from the logit the results have implications for issues such as firm level pricing in addition to specifying a probit model and providing comparisons with the logit model the paper also addresses the third issue raised above we propose a simple alternative to the purchase incidence brand choice specification by decomposing the demand for a brand into a category demand equation and a conditional brand choice share equation we provide a comparison of results from this specification to those from the specification that includes the no purchase alternative and find that estimated elasticities are sensitive to the specification used we also estimate the demand function parameters using a traditional specification such as the double logarithmic model here we find that the estimated elasticities could be signed in such a manner as to be not useful for firm level pricing decisions one of the key limitations of the proposed model is that while it accounts for the purchase incidence and brand choice decisions of households it does not account for differences across consumers in their purchase quantities the model and analysis are best suited for product categories in which consumers typically make single unit purchases another limitation is more practical in nature while recent advances have been made in computing probit probabilities it could nevertheless be a challenge to do so when the number of alternatives is large

understanding reference price shoppers a within and cross category analysis abstract the authors attempt to draw profiles of reference price shoppers specifically the authors study how selected factors that affect brand choice are correlated with consumer sensitivity to gains and losses with respect to internal reference prices they also study the interaction between sociodemographics and gain and loss sensitivity furthermore the authors analyze cross category correlations in gain and loss sensitivity to shed light on their individual and category specific characters in three categories the results show significant heterogeneity in loss sensitivity among consumers and indicate that loss sensitivity is greater and more heterogeneous than gain sensitivity across categories the results show that loss sensitive shoppers are less influenced by past brand use and that both loss and gain sensitive shoppers more sensitive to price display and feature than the average consumer loss sensitive households tend to be larger and their heads are less likely to be fully employed

limited choice sets local price response and implied measures of price competition it is becoming increasingly evident that a consumer s brand choice decision in low involvement categories does not involve full search evaluation and comparison of price information of all brands available at point of purchase global price response the authors propose a two stage choice process in which the consumer first identifies a subset of brands within the universal set of brands called the choice set and then evaluates only those brands that are in the choice set relative to one another to select a single brand the authors find that consistent with reports of the extent of external price search of consumers response to shelf price variations is limited to the brands in the choice set local price response their results indicate that employing the assumption of global price response may lead to biased estimates of price elasticity and derived measures of clout and vulnerability to enable a managerially meaningful and useful assessment of a brand s competitive clout and vulnerability the