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Taste and Quality Perception of Attributes in Product Differentiation: An Econometric Model with Latent Variables

Author

Listed:
  • Sandrine Costa

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech)

  • Serge Garcia

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech)

  • Lisette Ibanez

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech)

Abstract

We study the consumers' preferences for the various attributes of a product. We consider that the consumers'choices are not guided by observed characteristics of a product, but by the quality perception consumers have on these attributes. Our model integrates this issue by means of latent variables, and is interested in the influence of the information received by the consumer on this perception. It also includes consumers' attitudes by supposing that the weight consumers put on attributes describes their tastes. An econometric application on material choices (wood vs. PVC) in the French window market valid these assumptions.

Suggested Citation

  • Sandrine Costa & Serge Garcia & Lisette Ibanez, 2007. "Taste and Quality Perception of Attributes in Product Differentiation: An Econometric Model with Latent Variables," Working Papers - Cahiers du LEF 2006-01, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
    • Handle: RePEc:lef:wpaper:2007-01
    as

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    References listed on IDEAS

    as
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    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
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    8. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    quality perception; information; taste; latent variable model; wood;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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