Discrete Choice Theory of Product Differentation (The MIT Press) - Hardcover

Anderson, Simon P.; Palma, Andre De

Hardcover

ISBN 10: 026201128X ISBN 13: 9780262011280

Publisher: MIT Press, 1992

Synopsis

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.

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.

About this title

About the Authors

Simon P. Anderson is Associate Professor of Economics at the University of Virginia.

André de Palma is Professor of Marketing at the University of Geneva.

Jacques-Franç 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.

Edition details

• Publisher: MIT Press
• Publication date: 1992
• Language: English
• ISBN 10: 026201128X
• ISBN 13: 9780262011280
• Binding: Hardcover
• Number of pages: 446