Blurred boundaries: a flexible approach for segmentation applied to the car market

Laura Grigolon

Department of Economics Working Papers from McMaster University

Abstract: Prominent features of differentiated product markets are segmentation and product proliferation that blurs the boundaries between segments. I develop a tractable demand model,the Ordered Nested Logit, which allows for over lap between neighboring segments.I apply the model to the automobile market where segments are ordered from small to luxury. I find that consumers, when substituting outside their vehicle segment, are more likely to switch to a neighboring segment. Accounting for such a symmetric substitution matters when evaluating the impact of new product introduction or studying the effect of subsidies on fuel-efficient cars.

Pages: 37 pages
Date: 2017-11-30
New Economics Papers: this item is included in nep-com, nep-ene and nep-tre
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Blurred boundaries: A flexible approach for segmentation applied to the car market (2021)
Working Paper: Blurred boundaries: a flexible approach for segmentation applied to the car market (2021)
Working Paper: Blurred Boundaries: A Flexible Approach for Segmentation Applied to the Car Market (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2017-17

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