The conventional wisdom in economic theory holds that switching costs make markets less competitive. This paper challenges this claim. We find that steady-state equilibrium prices may fall as switching costs are introduced into a simple model of dynamic price competition that allows for...

There is a substantial literature that documents the presence of state dependent utility with packaged goods data. Typically, a form of brand loyalty is detected whereby there is a higher probability of purchasing the same brand as has been purchased in the recent past. The economic significance...

We present several empirical facts about trends in marketing investment in the US. We also present estimates of the private value of brands to firms and aggregate intangible brand capital stocks created by these investments. These investments include the creation and maintenance of a brand name...

Abstract We study the welfare implications of personalized pricing, an extreme form of third-degree price discrimination implemented with machine learning for a large, digital firm. We conduct a randomized controlled pricing field experiment to train a demand model and to conduct inferences...

A long literature has developed econometric methods for estimating individual-consumer-level demand systems that accommodate corner solutions. The increasing access to transaction-level customer purchase histories across a wide array of markets and industries vastly expands the prospect for...

Discrete choice models of aggregate demand, such as the random coefficients logit, can handle large differentiated products categories parsimoniously while still providing flexible substitution patterns. However, the discrete choice assumption may not be appropriate for many categories in which...

We present a framework to measure empirically the size of indirect network effects in high-technology markets with competing incompatible technology standards. These indirect network effects arise due to inter-dependence in demand for hardware and compatible software. By modeling the joint...

The extant literature using household scanner data to estimate consumer choice models has identified two key sources of bias in estimated mean responses to marketing variables. Omitted heterogeneity may bias mean responses towards zero. At the same time, omitted time-varying characteristics of...

We establish the Hurwicz-Uzawa integrability of the broad class of discrete-choice additive random-utility models of individual consumer behavior with perfect substitutes preferences and divisible goods. We derive the corresponding indirect uility function and then establish a representative...

We present a framework to measure empirically the size of indirect network effects in high-technology markets with competing incompatible technology standards. These indirect network effects arise due to inter-dependence in demand for hardware and compatible software. By modeling the joint...