A Category-Level Model of Asymmetric Complements

45 Pages Posted: 28 Apr 2010

See all articles by Sanghak Lee

Sanghak Lee

Arizona State University; University of Iowa - Department of Marketing

Jaehwan Kim

Korea University Business School (KUBS)

Greg M. Allenby

Ohio State University (OSU) - Department of Marketing and Logistics

Date Written: April 26, 2010

Abstract

Asymmetric complements refer to goods where one is more dependent on the other, yet consumers receive enhanced benefit from consuming both. Examples include garden hoses and sprinklers, chips and dip, and routine versus personalized services where the former has a broader base for utility generation and the latter is more dependent on the other's presence. Measuring the presence of asymmetries is difficult because it requires longitudinal variation of utility where the degree of inter-dependency changes. We introduce a utility structure with multiplicative demand shocks capable of identifying the origin of demand variation, and investigate the presence of asymmetric complementarity using scanner panel data of cereal and milk purchases. Implications are explored through counterfactual analyses involving cross price elasticities, and spillover effects.

Keywords: Choice model, utility theory, Bayesian estimation

JEL Classification: C11, D12, M31

Suggested Citation

Lee, Sanghak and Kim, Jaehwan and Allenby, Greg M., A Category-Level Model of Asymmetric Complements (April 26, 2010). Fisher College of Business Working Paper, Available at SSRN: https://ssrn.com/abstract=1596218 or http://dx.doi.org/10.2139/ssrn.1596218

Sanghak Lee

Arizona State University ( email )

Tempe, AZ 85287-4106
United States
480-965-5433 (Phone)

University of Iowa - Department of Marketing ( email )

United States

Jaehwan Kim

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea
822.3290.2603 (Phone)
822.922.7220 (Fax)

Greg M. Allenby (Contact Author)

Ohio State University (OSU) - Department of Marketing and Logistics ( email )

Fisher Hall 524
2100 Neil Ave
Columbus, OH 43210
United States

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