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Discrete Choice Theory of Product Differentiation

ISBN-10: 026201128X

ISBN-13: 9780262011280

Edition: 1992

Authors: Simon P. Anderson, Andre De Palma, Jacques-Fran�ois Thisse

List price: $84.00
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Product differentiation - in quality, packaging, design, color, and style - has an important impact on consumer choice. It also provides a rich source of data that has been largely unexplored because there has been no generally accepted way to model the information available. This important study shows that an understanding of product differentiation is crucial to understanding how modern market economies function and that differentiated markets can be analyzed using discrete choice models of consumer behavior. It provides a valuable synthesis of existing, often highly technical work in both differentiated markets and discrete choice models and extends this work to establish a coherent theoretical underpinning for research in imperfect competition. The discrete choice approach provides an ideal framework for describing the demands for differentiated products and can be used for studying most product differentiation models in the literature. By introducing extra dimensions of product heterogeneity, the framework also provides richer models of firm location. Discrete Choice Theory of Product Differentiation introduces students and researchers to the field, starting at the beginning and moving through to frontier research. The first four chapters detail the consumer-theoretic foundations underlying choice probability systems (including an overview of the main models used in the psychological theory of choice), while the next four chapters apply the probabilistic choice approach to oligopoly models of product differentiation, product selection, and location choice. The final chapter suggests various extensions of the models presented as well topics for further research. Simon P. Anderson is Associate Professor of Economics at the University of Virginia. Andreacute; de Palma is Professor of Marketing at the University of Geneva. Jacques-Franccedil;ois Thisse is Professor of Economics at the University of Paris I-Sorbonne, and is on the staff of the Center for Operations Research and Econometrics in Louvain-la-Neuve, Belgium.
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Book details

List price: $84.00
Copyright year: 1992
Publisher: MIT Press
Publication date: 10/16/1992
Binding: Hardcover
Pages: 448
Size: 6.50" wide x 9.50" long x 1.25" tall
Weight: 2.090
Language: English

List of Tables
List of Figures
Product Differentiation and Discrete Choice Models
Some Basic Themes
Organization of the Book
Review of Discrete Choice Models
Models with Discrete Responses
Foundations of Discrete Choice Models
Models with Stochastic Decision Rules
Models with Stochastic Utility
The Multinomial Logit
Generalizations of the Multinomial Logit
Stochastic Dependency among Alternatives
The Representative Consumer Approach
Discrete Choice Models and the Demand for Differentiated Products
Reinterpretation of Demand with a Continuum of Consumers
A Representative Consumer Theorem for Discrete Choice Models
The Multinomial Logit Representative Consumer
The Logit Representative Consumer with Endogenous Total Consumption
The CES Representative Consumer Model
The Address Approach
Description of the Address Model
An Address Theorem for Discrete Choice Models
Some Applications
The CES as an Address Model
A Synthesis of Alternative Preference Foundations of Product Differentiation
A Three-Way Synthesis
The Alternative Interpretations of the Hotelling Model
The Logit and CES Models
Comparison of Parameters: A Synthesis of the Alternative Approaches for the Logit and CES
Oligopoly with Product Differentiation
Models of Product Differentiation
Existence of a Price Equilibrium
Properties of Short-Run and Long-Run Equilibria
Market Equilibrium and Optimum Product Diversity
Oligopoly and the Logit Model
The Basic Logit Oligopoly Model
Optimum and Equilibrium Product Diversity: The Logit and the CES
The Logit with an Outside Alternative
The Logit and Quality Choice
A Logit Model with Search
Multiproduct Oligopoly: A Nested Logit Approach
Network Externalities with Differentiated Products
Product Selection, Location Choice, and Spatial Pricing
Locational Competition
Product Selection and Price Competition
Spatial Price Policies and Location
Spatial Competition and the Logit Model
Probabilistic Discrete Choice Approach and Spatial Competition
Competition over Locations
Location Choice under Mill Pricing
Market Equilibrium and Optimum under Alternative Spatial Price Policies
Further Directions