Methods for Evaluating Suitability of Econometric Demand Models in Design for Market Systems

Publication Type:
Conference Proceeding
2009 ASME International Design Engineering Technical Conferences - Volume 5: 35th Design Automation Conference, Parts A and B, 2009, 5 pp. 397 - 406
Issue Date:
Filename Description Size
Thumbnail2009005076OK.pdf944.43 kB
Adobe PDF
Full metadata record
This paper articulates some of the challenges for what has been an implicit goal of design for market systems research: To predict demand for differentiated products so that counterfactual experiments can be performed based on changes to the product design (i.e., attributes). We present a set of methods for examining econometric models of consumer demand for their suitability in product design studies. We use these methods to test the hypothesis that automotive demand models that allow for nonlinear horizontal differentiation perform better than the conventional functional forms, which emphasize vertical differentiation. We estimate these two forms of consumer demand in the new vehicle automotive market, and find that using an ideal-point model of size preference rather than a monotonic model has model fit but different attribute substitution patterns. The generality of the evaluation methods and the range of demand model issues to be explored in future research are highlighted.
Please use this identifier to cite or link to this item: