A Model of Latent Symmetry in Cross Price Elasticities*
نویسنده
چکیده
This paper develops the Latent Symmetric Elasticity Structure (LSES), a market share price elasticity model which allows elasticities to be decomposed into two components: a symmetric substitution index revealing the strength of competition between brand pairs, and a brand-specific coefficient revealing the overall impact of a brand on its competitors. An application of the model to unconstrained cross price elasticities shows that brand-price competition in one market is wellrepresented by a LSES model in which brand substitutability and elasticity asymmetry are related to average price level.
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