Valuing intangible assets with a nested logit market share model

摘要

This paper develops an econometric method for valuing intangible assets using nested logit market share assumptions. Specifically, a method is developed to measure the value to a license holder of owning a branded consumer product. While it is well known that brands confer values to their owners, existing methods for establishing a brand's value via comparable, profit, or income methods are often fraught with imprecision or are frequently based on untested assumptions. An economic approach to brand valuation is developed in which the demand for branded goods is estimated and compared to the demand for comparable unbranded goods including both private label and generic commodities. The economic analysis relies on oligopoly pricing models and certainassumptions regarding the opportunity use of the brand holder's fixed investment. This paper extends the multinomial logit structure of preferences assumed in Dubin [1998a. The Demand for Branded and Unbranded Products--An Econometric Method for ValuingIntangible Assets. Studies in Consumer Demand--Econometric Methods Applied to Market Data. Kluwer Academic Publishers, Massachusetts, Boston, pp. 77-127] and derives trademark valuation fractions with a nested logit market share model. The market share demand model in Dubin [1998a. The Demand for Branded and Unbranded Products--An Econometric method for Valuing Intangible Assets. Studies in Consumer Demand--Econometric Methods Applied to Market Data. Kluwer Academic Publishers, Massachusetts, Boston, pp. 77-127] is re-estimated under nested logit assumptions and results for the trademark fraction are compared.