An application of econometric models to international marketing

Introduction: With more and more firms contemplating expansion in the international market, the question of how a firm estimates its sales potential in a given country takes on increasing importance. Certainly one vital piece of information in estimating sales potential would be the size of the total current market in that country. This article considers the various ways in which firms might estimate market size by country, with particular consideration given to the use of econometric models.The article aims at three related questions. First, what has happened over the past thirty years in the use of econometric models for measuring geographical markets? Second, is it possible to demonstrate that currently available econometric techniques lead to “improved” measurement of geographical markets—and, in particular, for international markets? Finally, have advances in applied econometric analysis over the past thirty years led to any demonstrable progress in measuring geographical markets?