A Dynamic Formulation for Car Ownership Modeling

Discrete choice models are commonly used in transportation planning and modeling, but their theoretical basis and their applications have been mainly developed in a static context. We propose to develop an estimation technique for analyzing the impact of technological change on the dynamics of consumer demand. The proposed research presents a dynamic model of consumer demand that explicitly accounts for consumers’ expectations of future product quality and the market evolution. The timing of consumers’ purchases is formalized as an optimal stopping problem where the agent must decide on the optimal time of purchase. This model frame will be further improved by modeling the choice from a set of differentiated products whose quality changes stochastically over time. The framework proposed is developed in the context of car ownership.