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Consumer heterogeneity and the shape of purchase rate functions

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  • Demetrios Vakratsas

Abstract

This study suggests that non‐monotonic purchase rates, frequently observed in empirical studies of consumer purchase timing, can be an artifact of consumer heterogeneity. We use a theoretical purchase timing model with consumer heterogeneity to develop market scenarios under which non‐monotonic rates may obtain. The results suggest that non‐monotonic rates are more likely to observe in product markets that are either highly concentrated or where the heavy buyer segment is large. In such markets, therefore, one should not rely on non‐monotonic rate curves to predict household purchase incidence. © 1998 John Wiley & Sons, Ltd.

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  • Demetrios Vakratsas, 1998. "Consumer heterogeneity and the shape of purchase rate functions," Applied Stochastic Models and Data Analysis, John Wiley & Sons, vol. 14(1), pages 85-94, March.
    • Handle: RePEc:wly:apsmda:v:14:y:1998:i:1:p:85-94
    DOI: 10.1002/(SICI)1099-0747(199803)14:13.0.CO;2-R
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    Cited by:

    1. Demetrios Vakratsas & Frank M. Bass, 2002. "A segment-level hazard approach to studying household purchase timing decisions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(1), pages 49-59.

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