Homework answers / question archive / An econometrician estimates the relationship q = α1 + α1p1 + α2p2 where q is the demand for a product, α1 is the effect on that demand of a unit change in the price p1 of the product itself, and α2 is the effect of a unit change in the price p2 of a rival product

An econometrician estimates the relationship q = α1 + α1p1 + α2p2 where q is the demand for a product, α1 is the effect on that demand of a unit change in the price p1 of the product itself, and α2 is the effect of a unit change in the price p2 of a rival product

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An econometrician estimates the relationship q = α₁ + α₁p₁ + α₂p₂ where q is the demand for a product, α1 is the effect on that demand of a unit change in the price p₁ of the product itself, and α₂ is the effect of a unit change in the price p₂ of a rival product. It is found that α₁ and α₂ are significantly different from zero, but insignificantly different from each other. What does this suggest about the appropriate model for analyzing the market for these products, assuming there is free entry into that market?