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Embedding consumer taste for location into a structural model of equilibrium

Author

Listed:
  • Ciara Whelan
  • Franco Mariuzzo
  • Patrick P. Walsh

Abstract

Given that brands (products) are location specific in terms of coverage of retail stores, we allow consumers to have preferences over location and products to carry distribution costs, alongside preferences and costs over other observable and unobservable product characteristics. We embed these considerations into Berry, Levinsohn and Pakes (1995) to jointly estimate demand and cost parameters for brands (products) in Retail Carbonated Soft Drinks. Allowing for location has a very significant impact on estimated primitives and the predictive power of the structural model. As a counterfactual exercise we show the effects on welfare of an equilibrium that results from a change in the distribution of consumer taste for location.

Suggested Citation

  • Ciara Whelan & Franco Mariuzzo & Patrick P. Walsh, 2005. "Embedding consumer taste for location into a structural model of equilibrium," Working Papers 200503, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200503
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    File URL: http://hdl.handle.net/10197/140
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    Cited by:

    1. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2004. "EU Merger Control in Differentiated Product Industries," CESifo Working Paper Series 1312, CESifo.
    2. Patrick Paul Walsh & Franco Mariuzzo & Ciara Whelan, 2005. "Merger Control in Differentiated Product," Trinity Economics Papers tep10, Trinity College Dublin, Department of Economics.
    3. repec:tcd:wpaper:tep10 is not listed on IDEAS

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    More about this item

    Keywords

    Consumer taste for location distributions; Differentiated products; Discrete choice; Aggregation; Structural model; Retail carbonated soft drinks; Consumers' preferences; Product differentiation; Soft drinks;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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