Blurred boundaries: A flexible approach for segmentation applied to the car market

• 成果类型: Article
• 署名作者: Grigolon, Laura
• 署名单位: University of Mannheim; Centre for Economic Policy Research - UK
• 刊物名称: QUANTITATIVE ECONOMICS
• ISSN/ISSBN: 1759-7323
• DOI: 10.3982/QE1434
• 发表日期: 2021
• 页码: 1273-1305
• 关键词: Discrete choice model; Generalized Extreme Value; Ordered Nested Logit; D11; D12; L62; M3

摘要

Prominent features of differentiated product markets are segmentation and product proliferation blurring the boundaries between segments. I develop a tractable demand model, the Ordered Nested Logit, which allows for asymmetric substitution between segments. I apply the model to the automobile market where segments are ordered from small to luxury. I find that consumers, when substituting outside their vehicle segment, are more likely to switch to a neighboring segment. Accounting for such asymmetric substitution matters when evaluating the impact of new product introduction or the effect of subsidies on fuel-efficient cars.