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Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns

Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2·2% gain in the estimated user surplus. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

Estimating Multiple-Discrete Choice Models: An Application to Computerization Returns

The Review of Economic Studies , Volume 66 (2) – Apr 1, 1999

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References (19)

Publisher
Oxford University Press
Copyright
© Published by Oxford University Press.
Subject
Articles
ISSN
0034-6527
eISSN
1467-937X
DOI
10.1111/1467-937X.00093
Publisher site
See Article on Publisher Site

Abstract

Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2·2% gain in the estimated user surplus.

Journal

The Review of Economic StudiesOxford University Press

Published: Apr 1, 1999

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