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On the Existence of Quality Measures in Random Utility Models

  • Szczygielski, Krzysztof
  • Komisarski, Andrzej

Random Utitly Models (RUMs) are a particularly convenient way of modelling product differentiation. In this paper we demonstrate that they can be used to examine the possibilities of creating quality measures from data on prices and sales volumes. We formulate conditions sufficient for the existence of quality measures in two broad families of RUMs: additive random utility models and pure vertical differentiation models.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42261.

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Date of creation: 30 Oct 2012
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Handle: RePEc:pra:mprapa:42261
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  1. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  2. Walker, Joan & Ben-Akiva, Moshe, 2002. "Generalized random utility model," Mathematical Social Sciences, Elsevier, vol. 43(3), pages 303-343, July.
  3. CREMER, Helmuth & THISSE, Jacques-François, . "Location models of horizontal differentiation: a special case of vertical differentiation models," CORE Discussion Papers RP 931, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Juan Carlos Hallak & Peter K. Schott, 2008. "Estimating Cross-Country Differences in Product Quality," NBER Working Papers 13807, National Bureau of Economic Research, Inc.
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