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

Laura Grigolon

Quantitative Economics, 2021, vol. 12, issue 4, 1273-1305

Abstract: Prominent features of differentiated product markets are segmentation and product proliferation blurring the boundaries between segments. I develop a tractable demand model, the Ordered Nested Logit, which allows for asymmetric substitution between 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 asymmetric substitution matters when evaluating the impact of new product introduction or the effect of subsidies on fuel‐efficient cars.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.3982/QE1434

Related works:
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)
Working Paper: Blurred boundaries: a flexible approach for segmentation applied to the car market (2017)
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: https://EconPapers.repec.org/RePEc:wly:quante:v:12:y:2021:i:4:p:1273-1305

Ordering information: This journal article can be ordered from
https://www.econometricsociety.org/membership

Access Statistics for this article

More articles in Quantitative Economics from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().