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Empirical Properties of Diversion Ratios / Christopher T. Conlon, Julie Holland Mortimer.
- Format:
- Book
- Author/Creator:
- Conlon, Christopher T.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24816.
- NBER working paper series no. w24816
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- The diversion ratio for products j and k can be interpreted as the result of an experiment: increase the price of product j, measure the number of consumers who leave product j, and then measure the fraction of leavers who switch to a substitute product k. In theory, this is expressed as the ratio of demand derivatives that enter the multi-product Bertrand-Nash first-order condition for a firm. In practice, diversion ratios are also measured from second-choice data or customer switching surveys. We establish a LATE interpretation of diversion ratios, and show how diversion ratios can be obtained from different interventions (price changes, quality changes, assortment changes) and how those different measures relate to one another and to the underlying properties of demand.
- Notes:
- Print version record
- July 2018.
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