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Embedding consumer taste for location into a structural model of equilibrium

Ciara Whelan (), Franco Mariuzzo and Patrick Walsh ()

No 200503, Working Papers from School of Economics, University College Dublin

Abstract: Given that brands (products) are location specific in terms of coverage of retail stores, we allow consumers to have preferences over location and products to carry distribution costs, alongside preferences and costs over other observable and unobservable product characteristics. We embed these considerations into Berry, Levinsohn and Pakes (1995) to jointly estimate demand and cost parameters for brands (products) in Retail Carbonated Soft Drinks. Allowing for location has a very significant impact on estimated primitives and the predictive power of the structural model. As a counterfactual exercise we show the effects on welfare of an equilibrium that results from a change in the distribution of consumer taste for location.

Keywords: Consumer taste for location distributions; Differentiated products; Discrete choice; Aggregation; Structural model; Retail carbonated soft drinks; Consumers' preferences; Product differentiation; Soft drinks (search for similar items in EconPapers)
JEL-codes: L11 L62 (search for similar items in EconPapers)
Date: 2005-01
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Downloads: (external link)
http://hdl.handle.net/10197/140 First version, 2005 (application/pdf)

Related works:
Working Paper: Embedding Consumer Taste for Location into a Structural Model of Equilibrium (2005) Downloads
Working Paper: Embedding Consumer Taste for Location into a Structural Model of Equilibrium (2005) Downloads
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