Demand for Differentiated Products, Discrete Choice Models, and the Characteristics Approach

Simon Anderson (), André Jean-Louis de Palma () and Jacques François Thisse ()

Review of Economic Studies, 1989, vol. 56, issue 1, pages 21-35

Abstract: The authors propose a specific characteristics framework in order to construct linkages between alternative approaches to modeling product differentiation. It is shown that a demand system that satisfies the gross substitutes property imposes specific requirements on the locations of products. In particular, the dimension of the characteristics space must be larger than, or equal to, the number of products minus one. The authors then identify a method for casting a given demand system into their characteristics framework. This is illustrated for the logit, probit, and linear probability models of discrete choice theory. Finally, the authors find a characteristics representation of the CES representative consumer. Copyright 1989 by The Review of Economic Studies Limited.

Date: 1989
References: Add references at CitEc
Citations View citations in EconPapers (17) Track citations by RSS feed

Downloads: (external link)
http://links.jstor.org/sici?sici=0034-6527%2819890 ... 0.CO%3B2-T&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:restud:v:56:y:1989:i:1:p:21-35

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0034-6527

Access Statistics for this article

Review of Economic Studies is edited by Andrea Prat, Bruno Biais, Kjetil Storesletten and Enrique Sentana

More articles in Review of Economic Studies from Wiley Blackwell
Series data maintained by Wiley-Blackwell Digital Licensing ().