Structural Modeling and Policy Simulation.

This article outlines several advantages of using structural modeling for policy evaluations and some of the challenges presented by marketing problems. The authors note that a primary goal of research in marketing is to evaluate and recommend optimal policies for marketing actions. A structural model begins with a view that observed behavior is the outcome of a decision process in which a consumer or firm makes optimal decisions based on a maximization of an objective function subject to resource constraints. All too frequently, researchers in marketing are viewed as net consumers of work from other fields. They also discuss how marketing data are dramatically richer than those in economics in a variety of important ways.