Document Type

Journal article

Source Publication

Decision Sciences

Publication Date

6-1-2013

Volume

44

Issue

3

First Page

557

Last Page

609

Keywords

Advertising; Demand Function; Empirical Study; Lead Time; Price; Quality; Rebate; Space

Abstract

A variety of mathematical forms have been developed to characterize demand functions which depend on a firm's operational and marketing activities. Such demand functions are being increasingly used by researchers in economics and different functional areas of business. We provide a comprehensive survey of commonly used demand models which depend on (i) price, (ii) rebate, (iii) lead time, (iv) space, (v) quality, and (vi) advertising. Our survey includes single firm–demand models in each category, as well as game theoretic multifirm models involving strategic interaction among the firms. We observe that certain types of functional forms, such as linear, power/iso-elastic, multinomial logit, and multiplicative competitive interaction, have been widely used to construct various demand models in all six categories, but that a large majority of publications deal with categories (i) and (v) of demand models. For each of the six categories, we survey relevant functional forms in the representative papers, and discuss the main properties, the advantages, the disadvantages, and comment on possible future research directions. We also present discussions of the applications of these analytical demand models in empirical studies. The article ends with a summary of our major findings.

DOI

10.1111/deci.12021

Print ISSN

00117315

E-ISSN

15405915

Publisher Statement

Copyright © 2013 The Authors. Decision Sciences Journal © 2013 Decision Sciences Institute. Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Huang, J., Leng, M., & Parlar, M. (2013). Demand functions in decision modeling: A comprehensive survey and research directions. Decision Sciences, 44(3), 557-609. doi: 10.1111/deci.12021