Marketing Letters

, Volume 3, Issue 2, pp 157–169 | Cite as

A model of latent symmetry in cross price elasticities

  • Gary J. Russell
Article

Abstract

This paper develops the Latent Symmetric Elasticity Structure (LSES), a market share price elasticity model which allows elasticities to be decomposed into two components: a symmetric substitution index revealing the strength of competition between brand pairs, and a brand-specific coefficient revealing the overall impact of a brand on its competitors. An application of the model to unconstrained cross price elasticities shows that brand-price competition in one market is well-represented by a LSES model in which brand substitutability and elasticity asymmetry are related to average price level.

Key words

Price Elasticity Brand Competition Market Structure Price Tiers 

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Copyright information

© Kluwer Academic Publishers 1992

Authors and Affiliations

  • Gary J. Russell
    • 1
  1. 1.Owen Graduate School of ManagementVanderbilt UniversityNashville

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