A Simple Measure of Product Substitutability Based on Common Purchases

01/28/2022

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by   Ondřej Sokol, et al.

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We propose a measure of product substitutability based on correlation of common purchases, which is fast to compute and easy to interpret. In an empirical study of a drugstore retail chain, we demonstrate its properties, compare it to a similarly simple measure of product complementarity, and use it to find small clusters of substitutes.