Empirical properties of diversion ratios

A-Tier
Journal: RAND Journal of Economics
Year: 2021
Volume: 52
Issue: 4
Pages: 693-726

Authors (2)

Christopher Conlon (not in RePEc) Julie Holland Mortimer (University of Virginia)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The diversion ratio for products j and k is the fraction of consumers who leave product j after a price increase and switch to product k. Theoretically, it is expressed as the ratio of demand derivatives from a multi‐product firm's Bertrand‐Nash first‐order condition. In practice, diversion ratios are also measured from second‐choice data or customer‐switching surveys. We establish a LATE interpretation of diversion ratios, and show how diversion ratios are obtained from different interventions (price, quality, or assortment changes) and how those measures relate to one another and to underlying properties of demand.

Technical Details

RePEc Handle
repec:bla:randje:v:52:y:2021:i:4:p:693-726
Journal Field
Industrial Organization
Author Count
2
Added to Database
2026-01-26