Note—Extending the Rotterdam Model to Test Hierarchical Market Structures

Naufel J. Vilcassim
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Naufel J. Vilcassim: Northwestern University

Marketing Science, 1989, vol. 8, issue 2, 181-190

Abstract: Two issues that have implications across a firm's marketing activities are the estimation of the market response functions, and the determination of the structure of the market in which its products compete. In a recent paper, Clements and Selvanathan (Clements, K. W., E. A. Selvanathan. 1988. The Rotterdam demand model and its application to marketing. (Winter) 60–75.) describe how the Rotterdam Demand System can be used to study these two issues in a joint framework. In this note we extend their model to test hierarchical market structures using data at the brand/form level. We also incorporate idiosyncratic response coefficients that capture the effects of advertising and/or other nonprice marketing mix variables separate from the effects of a price change. These extensions provide additional insights into the nature and extent of competition among brands within a product class.

Keywords: market structures; demand estimation; separability of preferences (search for similar items in EconPapers)
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:8:y:1989:i:2:p:181-190

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