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A Direct Utility Model for Asymmetric Complements

Author

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  • Sanghak Lee

    (Tippie College of Business, University of Iowa, Iowa City, Iowa 52242)

  • Jaehwan Kim

    (Korea University Business School, Korea University, Seoul 136-701, Korea)

  • Greg M. Allenby

    (Fisher College of Business, Ohio State University, Columbus, Ohio 43210)

Abstract

A symmetric complements refer to goods where one good is more dependent on the other, yet consumers receive enhanced utility from consuming both. Examples include garden hoses and sprinklers, chips and dip, and routine versus personalized services where the former has a broader base for utility generation and the latter is more dependent on the other's presence. Measuring asymmetric effects is difficult when all that is observed are the purchase quantities present in a consumer's market basket. We propose a direct utility model with a latent decision sequence for measuring asymmetric effects that allows us to capture differential responses to cross-category purchases and inventories. Scanner panel data of milk and cereal purchases are used to investigate the presence of asymmetric complementarity, and implications are explored through counterfactual analyses involving cross-price elasticities and spillover effects of merchandising variables.

Suggested Citation

  • Sanghak Lee & Jaehwan Kim & Greg M. Allenby, 2013. "A Direct Utility Model for Asymmetric Complements," Marketing Science, INFORMS, vol. 32(3), pages 454-470, May.
    • Handle: RePEc:inm:ormksc:v:32:y:2013:i:3:p:454-470
    DOI: 10.1287/mksc.2013.0782
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    References listed on IDEAS

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    Cited by:

    1. Jean-Pierre H. Dubé, 2018. "Microeconometric Models of Consumer Demand," NBER Working Papers 25215, National Bureau of Economic Research, Inc.
    2. John R. Howell & Sanghak Lee & Greg M. Allenby, 2016. "Price Promotions in Choice Models," Marketing Science, INFORMS, vol. 35(2), pages 319-334, March.
    3. Han, Yoonju & Chandukala, Sandeep R. & Li, Shibo, 2022. "Impact of different types of in-store displays on consumer purchase behavior," Journal of Retailing, Elsevier, vol. 98(3), pages 432-452.
    4. Kim, Chul & Jun, Duk Bin & Park, Sungho, 2018. "Capturing flexible correlations in multiple-discrete choice outcomes using copulas," International Journal of Research in Marketing, Elsevier, vol. 35(1), pages 34-59.
    5. Ludovic Stourm & Raghuram Iyengar & Eric T. Bradlow, 2020. "A Flexible Demand Model for Complements Using Household Production Theory," Marketing Science, INFORMS, vol. 39(4), pages 763-787, July.
    6. Takanori Adachi & Takeshi Ebina & Makoto Hanazono, 2017. "Endogenous Product Boundary," Manchester School, University of Manchester, vol. 85(1), pages 13-40, January.
    7. Anna E. Tuchman & Harikesh S. Nair & Pedro M. Gardete, 2018. "Television ad-skipping, consumption complementarities and the consumer demand for advertising," Quantitative Marketing and Economics (QME), Springer, vol. 16(2), pages 111-174, June.
    8. Jang, Sungha & Prasad, Ashutosh & Ratchford, Brian T., 2017. "Consumer Search of Multiple Information Sources and its Impact on Consumer Price Satisfaction," Journal of Interactive Marketing, Elsevier, vol. 40(C), pages 24-40.
    9. Dong Soo Kim & Roger A. Bailey & Nino Hardt & Greg M. Allenby, 2017. "Benefit-Based Conjoint Analysis," Marketing Science, INFORMS, vol. 36(1), pages 54-69, January.
    10. Wang, Ao, 2021. "A BLP Demand Model of Product-Level Market Shares with Complementarity," The Warwick Economics Research Paper Series (TWERPS) 1351, University of Warwick, Department of Economics.
    11. Michael Lewis & Yanwen Wang & Chunhua Wu, 2019. "Season Ticket Buyer Value and Secondary Market Options," Marketing Science, INFORMS, vol. 38(6), pages 973-993, November.
    12. Iaria, Alessandro & ,, 2020. "Identification and Estimation of Demand for Bundles," CEPR Discussion Papers 14363, C.E.P.R. Discussion Papers.
    13. Sanghak Lee & Sunghoon Kim & Sungho Park, 2022. "A sequential choice model for multiple discrete demand," Quantitative Marketing and Economics (QME), Springer, vol. 20(2), pages 141-178, June.
    14. Sanghak Lee & Greg M. Allenby, 2014. "Modeling Indivisible Demand," Marketing Science, INFORMS, vol. 33(3), pages 364-381, May.
    15. Gelper, Sarah & Wilms, Ines & Croux, Christophe, 2016. "Identifying Demand Effects in a Large Network of Product Categories," Journal of Retailing, Elsevier, vol. 92(1), pages 25-39.
    16. Kim, Youngju & Hardt, Nino & Kim, Jaehwan & Allenby, Greg M., 2022. "Conjunctive screening in models of multiple discreteness," International Journal of Research in Marketing, Elsevier, vol. 39(4), pages 1209-1234.
    17. Ma, Shaohui & Fildes, Robert & Huang, Tao, 2016. "Demand forecasting with high dimensional data: The case of SKU retail sales forecasting with intra- and inter-category promotional information," European Journal of Operational Research, Elsevier, vol. 249(1), pages 245-257.
    18. Lee, Sanghak & Kim, Hyowon & Kim, Jaehwan & Allenby, Greg M., 2018. "A choice model for mixed decision variables," Journal of choice modelling, Elsevier, vol. 28(C), pages 82-96.

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