Hostname: page-component-848d4c4894-wg55d Total loading time: 0 Render date: 2024-05-19T23:38:16.776Z Has data issue: false hasContentIssue false
  • English
  • Français

Discrete choice model in a market with product differentiation: the Argentine pension fund system

Published online by Cambridge University Press:  16 November 2007

IGNACIO APELLA
IGNACIO APELLA
Affiliation:
Center for the Study of State and Society, Sánchez de Bustamante 27 (C11773AAA) Buenos Aires, Argentina (e-mail: ignacioa@cedes.org)
Get access Rights & Permissions [Opens in a new window]

Abstract

The objective of the paper is to identify the determinants of the market share of each AFJP and the matrix of direct and cross price elasticities, by using a discrete choice model of product differentiation, based on the random utility theory. The results obtained from the estimation of a simple logit model using a panel of quarterly data between December of 1995 and June of 2006 shows the existence of two competitive mechanisms used by firms: prices and a vector of variables explaining horizontal differentiation, such as quantity of branches and salesman. The estimation of the nested-logit model supports the hypothesis of sequential election, where firms are chosen by their price setting strategies, defining two groups of competitors. Finally, the regulatory change that eliminates fixed commissions provides additional importance to prices signals in consumers' utility.

Type
Articles
Information
Journal of Pension Economics & Finance , Volume 7 , Issue 2 , July 2008 , pp. 179 - 197
Copyright
Copyright © 2007 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Apella, I. (2006) Heterogeneous demand and market segmentation: the Argentine fund pension system. Review of the ECLAC, 89(September): 39–57.Google Scholar
Berry, S. (1994) Estimating discrete-choice models of product differentiation. RAND Journal of Economics, 25(Summer): 242–262.CrossRefGoogle Scholar
Berry, S.Levinsohn, J. and Pakes, A. (1995) Automobile prices in market equilibrium. Econometrica, 63(4): 841–890.CrossRefGoogle Scholar
Böckem, S. (1994) A generalized model of horizontal product differentiation. Journal of Industrial Economics, 40(3): 287–298.CrossRefGoogle Scholar
Braberman, G., Chisari, O., and Quesada, L. (2000) La Industria de las AFJP en la Argentina: Costos, Comisiones y Alternativas para la Regulación. Desarrollo Económico, 40(158r): 1012–1057.CrossRefGoogle Scholar
Bresnahan, T. (1987) Competition and collusion in the American auto industry: the 1955 price war. Journal of Industrial Economics, 35(June): 457–482.CrossRefGoogle Scholar
Bresnahan, T. (1989) Empirical studies of industries with market power. In Handbook of Industrial Organization, Volume I. Elsevier Science Publishers, Chapter 17.Google Scholar
Chamberlin, E. (1929) Duopoly: value where sellers are few. Quarterly Journal of Economics, 43(November): 63–100.Google Scholar
Chamberlin, E. (1962) The Theory of Monopolistic Competition. 8th edn.Cambridge, MA: Harvard University Press.Google Scholar
Cremer, H. and Thisse, J.-F. (1991) Local models of horizontal differentiation: a special case of vertical differentiation models. Journal of Industrial Economics, 39(4): 383–391.CrossRefGoogle Scholar
Ferro, G. (2003) Regulación y Costos Variables Endógenos en el Mercado de Fondos de Jubilaciones y Pensiones Argentino. Working Paper 231. CEMA, Argentina. www.ucema.edu.ar.Google Scholar
Hotelling, H. (1929) Stability in competition. Economic Journal, 39(March): 41–57.CrossRefGoogle Scholar
Lancaster, K. (1966) A new approach to consumer theory. Journal of Political Economy, 74(April): 132–157.CrossRefGoogle Scholar
McFadden, D. (1974) Conditional logit analysis of qualitative choice behavior. In Zarembka, P. (ed.) Frontiers in Econometrics. New York: Academic Press.Google Scholar
Nevo, A. (2000) A practitioner's guide to estimation of random-coefficients logit models of demand. Journal of Economics and Management Strategy, 9(4): 513–545.Google Scholar
Superintendencia de Administradoras de Fondos de Jubilaciones y Pensiones (2006) El Regimen de Capitalización a 12 Años de la Reforma. Available in www.safjp.gov.arGoogle Scholar
Superintendencia de Administradoras de Fondos de Jubilaciones y Pensiones, Boletines Estadísticos Mensuales y Memorias Trimestrales. Available in www.safjp.gov.arGoogle Scholar
Trajtenberg, M. (1989) The welfare analysis of product innovations, with an application to computed tomography scanners. Journal of Political Economy, 97(April): 444–479.CrossRefGoogle Scholar