A Geographic Model of an Urban Automobile Market
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Abstract
A model is developed in which a customer’s probability of purchase at a given dealer is affected by dealer location and customer make preference, as well as the locations and strengths of all other dealers. Aggregation of the customer model gives a dealer market share (penetration) model, which may also be viewed as a model of competitive interaction. Such a model is fit to data for metropolitan Chicago. After fitting, the model permits estimation of the sales of a dealership with specified strength and location. The most obvious practical use of the model relates to market strategy for new dealerships in the automobile industry, but the model appears to be adaptable to site location problems in other fields as well.