Estimating multiple-discrete choice models: An application to computerization returns

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103 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)423-446
Number of pages24
JournalReview of Economic Studies
Volume66
Issue number2
DOIs
StatePublished - Apr 1999

ASJC Scopus subject areas

  • Economics and Econometrics

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