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%34 ___

#P œ


1 - f31∕


%33

# p '


(11)


As always in specifying empirical demand and valuation systems, the tradeoff is between
flexibility and relative ease of use and estimation. The DS system largely preserves the
convenience and usefulness for measuring access values of the semilog system, while
increasing its flexibility to represent price and income effects on demand.

Adding Quality Effects on Demand

A convenient way to represent quality effects is to allow the price coefficients to vary
with quality. In (5), one can define #4 œ #4! + #4D ∙ z4, and substituting these into (5),
each site demand function is a function of own- and substitute site quality levels. With
this addition, the own-quality slopes are

8           #!+!#4p48        #!+!#4p48

'x3/'z3 œ #3Dp8("3 - #3)e        - #3De

#!+!#4p48   8

œ #3D e         ^Р8("з - #3 ) - 1< .

The sign of the Marshallian own-quality slope of demand, which is eXpected to be
positive, depends not only on the quality parameter #3D but also the magnitude of
normalized price p38 relative to ("3- #3).

The Marshallian own-quality elasticities,

'  = 'X1 . Z1

%3D3 ´ ∂zt X1

can be written as



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