Portfolio Considerations in Differentiated Product Purchases: An Application to the Japanese Automobile Market

Wakamori, Naoki (21. April 2015): Portfolio Considerations in Differentiated Product Purchases: An Application to the Japanese Automobile Market. SFB/TR 15 Discussion Paper No. 499

Abstract

Consumers often purchase more than one differentiated product, assembling a portfolio, which might potentially affect substitution patterns of demand and, as a consequence, oligopolistic firms’ pricing strategies. To study such consumers’ portfolio considerations, this paper develops and estimates a structural model that allows for flexible complementarities/substitutabilities, using Japanese household-level data on automobile purchases. My estimates suggest that complementarities arise when households purchase a combination of one small automobile and one minivan as their portfolio. Simulation results suggest that, due to such portfolio considerations, a policy proposal of repealing the current tax subsidies for small eco-friendly automobiles would not necessarily sharply decrease the demand.

• Dokumententyp: Paper
• Keywords: Multiple Discrete Choices, Complementarities, Environmental Policy
• Fakultät: Sonderforschungsbereiche > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: D43, L13, L62, Q58
• Sprache: Englisch

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