An Experimental Method for Estimating Demand

AGENEROUS increase in the available empirical data concerning demand for individual branded products would be of considerable value to economists and businessmen. For the economist these data would provide an important foundation of fact upon which the structure of macroeconomic price theory could rest. For the businessman they would yield helpful indications about how buyers evaluated his brand, as well as the brands of competitors, thereby removing some of the guesswork from decisions concerning price, product design, and promotional activities. Consequently, it is interesting to find that relatively little has been done to obtain demand schedules for individual branded goods.' Why has this been the case? The answer can be found principally in the problem of measurement. When an attempt is made to estimate demand under market conditions, an extended period of observation is required, and the cost of gathering data is often high. Furthermore, the use of a protracted period of observation introduces a variety of uncontrolled variables whose effect cannot be accurately isolated and assessed. It appears that, so long as the market is used as the source of data, there is little hope of overcoming these difficulties.