A network price elasticity of demand model with product substitution

Hsien-Wei Chen () and Alvin Lim ()
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Hsien-Wei Chen: Retailer Products Research & Development
Alvin Lim: Retailer Products Research & Development

Journal of Revenue and Pricing Management, 2023, vol. 22, issue 4, No 2, 235-247

Abstract: Abstract A new price model that characterizes the transfer of demands between products through the concept of product networks is proposed. Via replacing the basic unit: pairs of products, to be used when considering the relationships between demands and prices of different products, with networks, the proposed model requires less observations to calibrate. Therefore, considering all the substitute products in the proposed model in analyzing price elasticity is possible. The feasibility of the proposed approach is demonstrated in its application to data from two North American grocery stores.

Keywords: Demand modeling; Substitute; Demand transfer network; Retail; Pricing (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41272-022-00375-w

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