Consumer Brand-Choice and the Equimarginal Principle of Utility Maximization: A Re-Conceptualization

This article1 questions the appropriateness of the equi-marginal principle of utility maximization in the context of brand choice. Two simple examples illustrate why this fundamental economic principle of consumer decision may be inadequate. We propose an alternative decision rule for utility maximization in the context of brand choice. This proposed decision rule helps understand a consumer's brand loyalty over repeated purchases at a given set of prices and also stickiness of brand choice to both, budget and price changes. This could have a significant bearing on demand estimation, which a priori specifies a downward sloping demand curve