The Impact af a Price Change on Consumer Choice of Automobiles

Abstract

This paper studies the impact of price change on the consumer choice of four selected automobiles in Malaysia: Saga 1.3cc, Saga 1.5cc, Wira 1.3cc, and Wira 1.5cc. The data were obtained from automobile reports compiled by the Malaysian Automotive Association (MAA), and analysed using the conditional and nested logit models. Our empirical analysis produced several key findings. Firstly, the sales of Saga 1.3cc appeared to be affected by  change in the price of Wira 1.3cc only, and vice versa. Secondly, the sales of Saga 1.5cc did not appear to be affected by change in the price of other models. Finally, the sales of Wira 1.5cc also did not appear to be affected by  change in the price of other models. Taken together, these results suggested that, except for Saga 1.3cc and Wira 1.3cc, there is little or no evidence that all of the car models under consideration are substitutes to each other in a pairwise comparison.