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On the Existence of Quality Measures in Random Utility Models

Szczygielski, Krzysztof and Komisarski, Andrzej (2012): On the Existence of Quality Measures in Random Utility Models.

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Abstract

Random Utitly Models (RUMs) are a particularly convenient way of modelling product differentiation. In this paper we demonstrate that they can be used to examine the possibilities of creating quality measures from data on prices and sales volumes. We formulate conditions sufficient for the existence of quality measures in two broad families of RUMs: additive random utility models and pure vertical differentiation models.

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