N lagrangia fraction this call lets at equal are 3 of

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n (Lagrangia fraction this call Lets ). 0 , 0 ( at equal are (3) of sides right and left then (1), equation solves ) 0 , 0 ( suppose Now, ) 3 ........ ( ) , ( ) , ( ) , ( ) , ( , ) 2 ......... ( ) , ( ) , ( ) , ( ) , ( , ) , ( / ) , ( ) , ( / ) , ( : is rule The ) 1 ....... ( ) , ( subject to ) , ( max λ y x y x y x y b y x y u y x x b y x x u or y x y b y x x b y x y u y x x u or y x y b y x x b y x y u y x x u c y x b y x u - = - = - = - =
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Tradition theory is based on the goods itself but  not the intrinsic properties of goods.  It does not answer why two goods are substitute  or complements Consumer’s reaction to new goods and quality  variations can not be answered Characteristics approach:  Lancaster (1966, 1979)
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Utility is derived from attributes  Consumption is an activity, goods are employed  alone or in combination to produce characteristics Infinite divisibility Lancaster’s model:
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Suppose z is a vector of characteristics (z1,  z2 .......... zn )
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Role of price in determining the demand for  differentiated product (brand) Economic explanation of brand loyalty Various extensions of Lancaster’s models Useful for empirical demand analysis of brands  which share similar characteristics Role of advertising If individual perceptions are established by some  random process Difficulties in defining characteristics operationally.  Divisibility of goods Contributions and Limitations
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Goods are indivisible Brands are available for a continuous range of  characteristics Eliminates transformation issue Hedonic price model: Rosen  (1974)
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  • Spring '12
  • AbhinavDhar
  • Left-wing politics, Lagrangian mechanics, Lancaster, .(1)

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