Technical Note—Consumer Choice and Market Expansion: Modeling, Optimization, and Estimation
研究了市场扩张效应如何融入离散消费者选择模型，并提出了交替优化期望最大化方法来估计模型，对品类规划和定价决策有实际指导意义。
The growth of market size is crucially important to firms, although researchers often assume that market size is constant in assortment and pricing management. I develop a model that incorporates the market expansion effects into discrete consumer choice models and investigate various operations problems. Market size, measured by the number of people who are interested in the products from the same category, is largely influenced by firms’ operations strategy, and it also affects assortment planning and pricing decisions. Failure to account for market expansion effects may lead to substantial losses in demand estimation and operations management. Based on real data, this paper uses an alternating-optimization expectation-maximization method that separates the estimation of consumer choice behavior and market expansion effects to calibrate the new model. The end-to-end solution approach on modeling, operations, and estimation is readily applicable in real business.