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Log-linear demand systems with differentiated products are inconsistent with the representative consumer approach

Author

Listed:
  • Takanori Adachi

    (Nagoya University)

  • Takeshi Ebina

    (Shinshu University)

Abstract

We argue that log-linear demands with differentiated products, which are viewed as useful modeling from an empirical standpoint, are generated from the representative consumer'Â’s utility only in a restrictive form.

Suggested Citation

  • Takanori Adachi & Takeshi Ebina, 2016. "Log-linear demand systems with differentiated products are inconsistent with the representative consumer approach," Economics Bulletin, AccessEcon, vol. 36(1), pages 260-267.
    • Handle: RePEc:ebl:ecbull:eb-15-00678
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I1-P26.pdf
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    References listed on IDEAS

    as
    1. Aguirregabiria, Victor & Nevo, Aviv, 2010. "Recent developments in empirical IO: dynamic demand and dynamic games," MPRA Paper 27814, University Library of Munich, Germany.
    2. repec:cup:cbooks:9781107016064 is not listed on IDEAS
    3. Armstrong, Mark & Vickers, John, 2015. "Which demand systems can be generated by discrete choice?," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 293-307.
    4. Jaffe Sonia & Weyl E. Glen, 2010. "Linear Demand Systems are Inconsistent with Discrete Choice," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-8, December.
    5. Igal Hendel & Aviv Nevo, 2013. "Intertemporal Price Discrimination in Storable Goods Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2722-2751, December.
    6. repec:cup:cbooks:9781107627314 is not listed on IDEAS
    7. repec:cup:cbooks:9781107016040 is not listed on IDEAS
    8. Baker, Jonathan B & Baresnahan, Timothy F, 1985. "The Gains from Merger or Collusion in Product-differentiated Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 33(4), pages 427-444, June.
    9. repec:cup:cbooks:9781107638105 is not listed on IDEAS
    10. Iñaki Aguirre & Simon G. Cowan, 2015. "Monopoly price discrimination with constant elasticity demand," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 329-340, October.
    11. repec:cup:cbooks:9781107016057 is not listed on IDEAS
    12. Galera, Francisco & Zaratiegui, Jesus M., 2006. "Welfare and output in third-degree price discrimination: A note," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 605-611, May.
    13. repec:cup:cbooks:9781107674165 is not listed on IDEAS
    14. Jaffe, Sonia & Kominers, Scott Duke, 2012. "Discrete choice cannot generate demand that is additively separable in own price," Economics Letters, Elsevier, vol. 116(1), pages 129-132.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Log-linear demands; Product differentiation; Representative consumer approach;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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