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Spanish Economic Review

, Volume 9, Issue 3, pp 193–218 | Cite as

Automobile demand, model cycle and age effects

  • María José MoralEmail author
  • Jordi Jaumandreu
Regular Article

Abstract

This paper is aimed at exploring the existence of typical patterns of automobile model life and the formal test for age effects in a discrete-choice demand framework estimated with data on the models sold in the Spanish market. Estimates show that the evolution of market shares entails and quantifies age effects resulting from consumer demand. These effects are clearly distinguishable from the impacts generated by changes in attributes and firm pricing. They carry an exogenous factor that is full of implications for firm behaviour over the life of a model: the modification of demand price sensitivities. As a result, for example, equilibrium own-price elasticities are observed to decrease until the fourth year of a model life, and then to increase again.

Keywords

Model life cycle Automobile demand Discrete-choice Differentiated products 

JEL Classification

D43 

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Copyright information

© Springer-Verlag 2006

Authors and Affiliations

  1. 1.Dpto. de Economía Aplicada e Ha EconómicaUniversidad Nacional de Educación a DistanciaMadridSpain
  2. 2.Dpto. de EconomíaGetafeSpain

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