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Econometric Models of the Demand for Quality-Differentiated Goods

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  • Hanemann, W. Michael

Abstract

This paper presents several models of the demand for quality differentiated goods in which the consumer decides which brand of product to select as well as how many units to buy. The models cover a variety of preference structures and can readily be estimated using standard techniques for switching regressions. From the fitted demand equations, one can calculate monetary measures of the welfare effects of changes in the price, quality, or variety of the brands. The models are then applied to data on households' demands for recreation sites i n the Boston area, and the values of the sites are calculated.

Suggested Citation

  • Hanemann, W. Michael, 1983. "Econometric Models of the Demand for Quality-Differentiated Goods," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8q83n6rk, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt8q83n6rk
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    References listed on IDEAS

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    1. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    3. Pesaran, M H & Deaton, Angus S, 1978. "Testing Non-Nested Nonlinear Regression Models," Econometrica, Econometric Society, vol. 46(3), pages 677-694, May.
    4. Bresnahan, Timothy F., 1981. "Departures from marginal-cost pricing in the American automobile industry : Estimates for 1977-1978," Journal of Econometrics, Elsevier, vol. 17(2), pages 201-227, November.
    5. Philips, Louis & Thisse, Jacques-Francois, 1982. "Spatial Competition and the Theory of Differentiated Markets: An Introduction," Journal of Industrial Economics, Wiley Blackwell, vol. 31(1-2), pages 1-9, September.
    6. Horsky, Dan & Sen, Subrata K, 1980. "Interfaces between Marketing and Economics: An Overview," The Journal of Business, University of Chicago Press, vol. 53(3), pages 5-12, July.
    7. Ernst R. Berndt & Bronwyn H. Hall & Robert E. Hall & Jerry A. Hausman, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 653-665, National Bureau of Economic Research, Inc.
    8. Lee, Lung-Fei & Trost, Robert P., 1978. "Estimation of some limited dependent variable models with application to housing demand," Journal of Econometrics, Elsevier, vol. 8(3), pages 357-382, December.
    9. Novshek, William & Sonnenschein, Hugo, 1979. "Marginal Consumers and Neoclassical Demand Theory," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1368-1376, December.
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