Modeling Price Elasticity - Part 2: Cross-Price-Elasticity

October 13, 2015
This experiment demonstrates how to model cross-price elasticity.
Price elasticity is the foundation of price optimization. This experiment uses the transaction data of a chowder store to show how a price change in salad will affect the sales of chowder, characterized by a quantity defined as 'cross-price elasticity'. It is the second demo experiment in the [Cortana Analytics Webinar for Retail Pricing][1]. **Input**: Daily price and demand of chowder. Daily price of salad. **Output**: The chowder's price elasticity and its cross-price elasticity with salad. See the output port of 'Train Model' and find them as the feature weights of 'Log_Price_Chowder' and 'Log_Price_Salad'. **Related Resources**: Check the video of the [Cortana Analytics Webinar for Retail Pricing][1] which is hosted also by Xueshan to learn the concept of price elasticity and the three steps to do price optimization. Created by a Microsoft Employee. [1]: