Vistesen, Claus (2009): Audi vs. BMW – On the Physical Heterogeneity of German Luxury Cars.
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This paper uses Logit and Probit regressions to test for and quantify the physical heterogeneity between German luxury cars. Using a matched sample database, the binary response variable consisting of Audis and BMWs is fitted to a matrix of physical characteristics such as power, torque, fuel consumption, engine displacement etc. The results indicate that having a forced induction engine (e.g. turbo) is associated with a 51% lower probability of observing a BMW and that increasing fuel consumption by 1 liter per 100km lowers the probability of observing a BMW with 61%. The results are discussed in relation to the idea that consumers may not differentiate across luxury products on the basis of physical characteristics and how this may introduce a bias with respect to predicting demand in the context of available market data.
|Item Type:||MPRA Paper|
|Original Title:||Audi vs. BMW – On the Physical Heterogeneity of German Luxury Cars|
|Keywords:||Audi, BMW, automobile industry, pure characteristics demand models, luxury cars|
|Subjects:||L - Industrial Organization > L6 - Industry Studies: Manufacturing > L62 - Automobiles; Other Transportation Equipment|
|Depositing User:||Claus Vistesen Vistesen|
|Date Deposited:||22. Dec 2009 08:51|
|Last Modified:||11. Feb 2013 19:23|
Audi and BMW websites (Germany, price catalogues); see data CD for BMW catalogues. The data for Audi is tabulated directly from Audi.de.
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