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product attributes model

Kent A. Jones


Developed by Kelvin Lancaster (1971) , the product attributes model sets out to explain consumer behavior as a process of choosing bundles of product characteristics or attributes inherent in goods and services, rather than simply choosing bundles of goods or services themselves. The basic assumption of the model is that the consumer's choice is based on maximizing utility from the product attributes subject to a budget constraint ( see utility maximization ). The model is particularly useful in analyzing differentiated product markets, in which specific products that are substitutes for each other are distinguished by their embodiment of a specific set of characteristics. For purposes of exposition, a two‐dimensional graph reveals the model's main features (see Douglas, 1992 , for textbook treatment and examples), and links it to the traditional budget constraint and indifference curve analysis of consumer behavior ( see indifference curves ). Figure 1 shows three specific products, each offering a specific amount of attribute X and attribute Y in constant proportions. Each unit of product A contains X a of attribute X and Y a of attribute Y , for example. Similarly, each unit of products B and C offers the attribute bundles ( X b , Y b ) and ( X c , Y c ), respectively. The attributes could represent calories ( X ) and vitamin content ( Y ) for competing ... log in or subscribe to read full text

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