Price And Non Price Determination in the Multiproduct Firm

Cover Price And Non Price Determination in the Multiproduct Firm
Price And Non Price Determination in the Multiproduct Firm
Glen L Urban
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The elasticities could be estimated on a subjective basis that reflects the decision makers best judgment. This approach might be justified since the decision must be made and if the model is not used, a much simpler and perhaps less accurate decision procedure would be used. Subjective inputs, however, should be used only after all empirical information relating to the problem has been considered. Input for the present model can be generated by statistical regressions on empirical data. The in...dustry elasticities and cross elasticities could be estimated from a regression of industry sales on past industry price and non-price variables. The use of logarithms would make the regression linear and usual econometric procedures could be used to estimate the constants -- the elasticities and cross elasticities . See Ronald E. Frank and William F. Massy, "Short Term Price and Dealing Effects in Selected Market Segments, " Journal of Marketing Resea rch II (May 1965) 171-185 for an application of the technique to market data.

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