Competitive market structures: a subset selection analysis

Market structure models are useful for identifying submarkets or for investigating the existence of submarkets in cases where within-group competition is more prevalent than across group competition. A model is developed that is based on a subset selection methodology that uses brand switching data to examine competitive market structures. This model has many uses, including testing for the existence of structure in the market and identifying a possible structure at the same time. It also tests for notable variety-seeking effects that can be found in the market and relates a degree of statistical confidence with the identified submarkets. This approach can by very useful to managers with unrealiable market structure information and also for conducting other types of analyses.