Uncovering Paths to Purchase of Heterogeneous Consumers Using Clustered Multivariate Autoregression

2015 ◽  
Author(s):  
Yicheng Song ◽  
Nachiketa Sahoo ◽  
Shuba Srinivasan ◽  
Chrysanthos Dellarocas
Keyword(s):  
Heterogeneous Consumers ◽  
Multivariate Autoregression

scholarly journals Getting Prices Right: What Should Be Done?

1998 ◽  
Vol 12 (1) ◽  
pp. 37-46 ◽  
Author(s):  
Angus Deaton
Keyword(s):  
Cost Of Living ◽  
Identification Problems ◽  
Single Index ◽  
Rate Of Increase ◽  
Price Indexes ◽  
Short Run ◽  
The Cost ◽  
Heterogeneous Consumers

Much of the profession accepts that the CPI likely overstates the rate of increase of the cost-of-living. It is less clear that there are sound and feasible steps that the BLS can adopt to improve matters in the short run. There are unresolved conceptual and identification problems in the measurement of quality. Superlative price indexes are not feasible, and feasible approximations are not superlative, and may not even be better. The need for a single index that aggregates over heterogeneous consumers with different incomes, tastes, and needs casts serious doubt on the cost-of-living approach.

scholarly journals Quality Matters: Monopolistic Competition with Heterogeneous Consumers

2019 ◽  
pp. 152-175
Keyword(s):  
Product Quality ◽  
Monopolistic Competition ◽  
Incentive Compatibility ◽  
Industrial Sector ◽  
Differentiated Products ◽  
Optimal Price ◽  
Demand Functions ◽  
Optimum Price ◽  
Heterogeneous Consumers ◽  
Love Of Variety

The paper builds a two-sector monopolistic competition model featuring multi-product firms and heterogeneous consumers endowed with a Cobb–Douglas utility nesting a generalized CES function. In contrast to the standard CES, the generalized CES function includes both the love of variety and the love for product quality, which makes it possible to distinguish consumers differing in their product quality perception. The industrial sector encompasses firms producing differentiated products of varied quality, targeting a certain type of consumer. In such a case, firms set the price and quality for a particular product so as to maximize their profits, while consumers find the optimum price-quality combination, which may be different for groups of consumers having different preferences. The model allows one to derive the demand functions of heterogeneous consumers for goods of different quality and makes it possible to analyze different strategies of firms in their choice of the optimal price-quality ratio for their products. It also allows the formulation of conditions for screening in the case of incomplete information about the type of consumers. The main difference between the equations for screening in the model of monopolistic competition and the standard screening models in theory of contracts lies in the absence of individual rationality restrictions in the monopolistically competitive setting, where only the incentive compatibility is taken into account for both groups of consumers. As a result, in the absence of additional restrictions on the part of the regulatory authorities, the screening procedure in the monopolistic competition setting leads to a decrease in welfare for less affluent consumers.

scholarly journals Heterogeneous Consumers, Segmented Asset Markets and the Real Effects of Monetary Policy

2020 ◽  
Vol 130 (628) ◽  
pp. 1031-1056
Author(s):  
Zeno Enders
Keyword(s):  
Monetary Policy ◽  
Aggregate Demand ◽  
Negative Relationship ◽  
Demand Elasticity ◽  
Asset Markets ◽  
Monetary Shocks ◽  
Financial Variables ◽  
Real Effects ◽  
Countercyclical Markups ◽  
Heterogeneous Consumers

Abstract This article proposes a novel mechanism by which changes in the distribution of money holdings have real aggregate effects. I develop a flexible-price model of segmented asset markets in which monetary policy influences the aggregate demand elasticity via heterogenous money holdings. Because varieties of consumption bundles are purchased sequentially, newly injected money disseminates slowly throughout the economy via second-round effects. The model predicts a short-term inflation-output trade-off, a liquidity effect, countercyclical markups, and pro-cyclical wages after monetary shocks. Among other correlations of financial variables, it also reproduces the empirical, negative relationship between changes in the money supply and markups.

A Relationship between Market Share Elasticities and Brand Switching Probabilities

1998 ◽  
Vol 35 (1) ◽  
pp. 99-113 ◽  
Author(s):  
Randolph E. Bucklin ◽  
Gary J. Russell ◽  
V. Srinivasan
Keyword(s):  
Market Share ◽  
Logit Model ◽  
Laundry Detergent ◽  
Brand Switching ◽  
Switching Matrix ◽  
Scanner Panel Data ◽  
Liquid Laundry Detergent ◽  
Heterogeneous Consumers ◽  
Scanner Panel ◽  
The Relationship

The authors derive a theoretical relationship between the aggregate market share elasticity matrix and the aggregate brand switching matrix on the basis of a logit model of heterogeneous consumers choosing among competing brands in a product class. Aggregate cross-elasticities are shown to be proportional (through a single scaling constant) to their corresponding aggregate row-conditional brand switching probabilities. Aggregate own-elasticities are shown to be proportional (through the negative of the same scaling constant) to one minus their corresponding aggregate row-conditional repeat purchase probabilities. An empirical analysis conducted on household scanner panel data in the liquid laundry detergent category shows that the theoretical correspondence holds as a very good approximation. An illustrative use of the relationship in estimating aggregate (store-level) models of market share indicates that the relationship helps improve predictive validity in a holdout period.

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