Model Estimation

Model Formulation

Study, a complete linearized model would be:
upper Q Subscript i Baseline equals beta 0 plus normal beta 1 ln left-parenthesis upper S upper K upper U Baseline 1 Subscript i Baseline right-parenthesis plus normal beta 21 ln left-parenthesis upper S upper K upper U Baseline 2 Subscript i Baseline right-parenthesis plus normal beta 3 ln left-parenthesis upper S upper K upper U Baseline 3 Subscript i Baseline right-parenthesis plus normal beta 4 ln left-parenthesis upper S upper K upper U Baseline 4 Subscript i Baseline right-parenthesis plus normal beta 5 upper F l y e r Subscript i plus
normal beta 6 upper D i s p l a y Subscript i plus normal beta 7 upper I n c o m e Subscript i plus normal beta 8 upper A g e Subscript i plus normal beta 9 upper R e g i o n Subscript i plus normal beta 10 upper S t o r e Subscript i plus question-mark Subscript i
The variable SKU1 is the own-price as defined before, while the three variables SKU2 to SKU4 are the cross-prices for competitive SKUs. Since these four price terms are transformed using the natural log, the associated parameters, beta 1 to beta 4, are interpreted as price ...

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