Consumer Demand and Unobservable Product Attributes

Leif Brubakk and John Dagsvik

Discussion Papers from Statistics Norway, Research Department

Abstract: Traditional approaches to consumer demand modelling ignores the problem associated with product heterogeneity where important product characteristics are latent. The point of departure in the present study is a particular framework developed in Dagsvik (1996a,b) and Dagsvik et al. (1998). In this approach the consumer is assumed to make his choice from a discrete set of product variants. The resulting model has the form of a modified conventional demand system, where the modification consists in replacing the standard price indexes by a indexes which are derived from underlying behavioral assumptions. The empirical application is based on a sample of Norwegian micro data market prices and household consumption.

Keywords: Consumer demand; Differentiated products; Unobserved product heterogeneity (search for similar items in EconPapers)
JEL-codes: C31 C43 D12 (search for similar items in EconPapers)
Date: 1998-08
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Citations: View citations in EconPapers (1)

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