Article ID: | iaor20125262 |
Volume: | 63 |
Issue: | 10 |
Start Page Number: | 1351 |
End Page Number: | 1362 |
Publication Date: | Oct 2012 |
Journal: | Journal of the Operational Research Society |
Authors: | von Auer L, Trede M |
Keywords: | statistics: regression, marketing |
The authors develop a dynamic hedonic regression approach to measuring the evolution of a comparative brand premium (pairwise price difference between two products that are identical in all respects apart from the brand). In contrast to existing approaches, the proposed Bayesian estimation method exploits the premia's intertemporal dependence structure, resulting in a higher level of accuracy of the estimated time paths of the brand premia. In addition, the authors present a novel, but straightforward way to construct confidence bands that cover the entire time series of brand premia with high probability. The authors apply their approach to a large, detailed data set on laser printers, which was gathered on a monthly basis over a 4‐year period.