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Semiparametric Estimation of a CES Demand System with Observed and Unobserved Product Characteristics [article]

Ali Hortacsu, Joonhwi Joo
2018 arXiv   pre-print
We apply our framework to scanner data on cola sales, where we show estimated demand curves can be upward sloping if zero market shares are not accommodated properly.  ...  Our CES demand estimation framework can accommodate zero predicted and observed market shares by conceptually separating the whether-to-buy decision and how-much-to-buy decision.  ...  Nesting the Homogeneous and Random Coefficient Logit Models of Demand We show that the predicted quantity market share expressions of the homogeneous and random coefficient logit models of demand can be  ... 
arXiv:1511.05600v8 fatcat:4jvsaws6evd2rosuecfzhvayga

Estimating the Pure Characteristics Demand Model: A Computational Note

Minjae Song
2008 Social Science Research Network  
The main challenge in estimating the model is to find "the mean product quality" that equates the model predicted market shares to real market shares.  ...  This paper provides details of the computational algorithm of Berry and Pakes (2005) for estimating the pure characteristics demand model.  ...  While the market share equation in BLP predicts non-zero market shares for arbitrary parameter values and any distributions of the random coefficient, the market share equation in the PCM may predict zero  ... 
doi:10.2139/ssrn.1349991 fatcat:pvwygiypozbhfdfvtg34rftzxm

Measuring consumerwelfareinthe CPU market: anapplication of the pure-characteristics demand model

Minjae Song
2007 The Rand Journal of Economics  
I am grateful to Steve Berry and Ariel Pakes for sharing their search algorithm used to estimate the pure characteristics demand model with multiple coefficients. All errors are mine.  ...  How have these developments in the CPU market affected consumer welfare? This paper estimates demand for CPUs and measures consumer welfare, using the pure characteristics demand model.  ...  With another random coefficient, consumers are no Table 2 - 2 1] Results of the demand estimation with one random coefficient [Table 2-2] Results of the demand estimation with one random coefficient  ... 
doi:10.1111/j.1756-2171.2007.tb00076.x fatcat:gdne5dwwzbexrmewj7vp3ash4q

The Flexible Substitution Logit: Uncovering Category Expansion and Share Impacts of Marketing Instruments

Qiang Liu, Thomas J. Steenburgh, Sachin Gupta
2011 Social Science Research Network  
Different instruments are relevant for different marketing objectives (category demand expansion or market share stealing).  ...  estimates of the sources of demand gains due to increased marketing investments in Direct-to-Consumer Advertising (DTCA), detailing, and Meetings and Events (M&E).  ...  We then incorporated physician heterogeneity and estimated a random coefficient logit, a random coefficient nested logit, and a random coefficient FSL model on the data.  ... 
doi:10.2139/ssrn.1923329 fatcat:poylznb6mzfr7ikjpg3asexore

Large Market Asymptotics for Differentiated Product Demand Estimators With Economic Models of Supply

Timothy B. Armstrong
2016 Econometrica  
IO economists often estimate demand for differentiated products using data sets with a small number of large markets.  ...  The reason is that product characteristic instruments achieve identification through correlation with markups, and, depending on the model of demand, the supply side can constrain markups to converge to  ...  Random Coefficients Logit with Single Product Firms The random coefficients logit model, used by BLP, generalizes the simple logit, allowing for more general forms of consumer heterogeneity through random  ... 
doi:10.3982/ecta10600 fatcat:kveziqtetfaw3oseptyd2izu2i

The Cross Attributes Flexible Substitution Logit: Uncovering Category Expansion and Share Impacts of Marketing Instruments

Qiang Liu, Thomas J. Steenburgh, Sachin Gupta
2015 Marketing science (Providence, R.I.)  
By contrast, the (random coefficient) logit and nested logit model predicts that gains from DTCA, M&E and detailing all would come largely from competing drugs -a counter-intuitive estimate of the sources  ...  Different instruments are relevant for different marketing objectives (category demand expansion or market share stealing).  ...  We then incorporated physician heterogeneity and estimated a random coefficient logit, a random coefficient nested logit, and a random coefficient CNFSL model on the data.  ... 
doi:10.1287/mksc.2014.0886 fatcat:dvllbiave5a4fo7624sethusfu

Challenges in Merger Simulation Analysis

Christopher R Knittel, Konstantinos Metaxoglou
2011 The American Economic Review  
Overall, our results present a cautionary tale not only for the use of random-coefficient logit models in merger analysis, but also the use of the Bertrand first-order conditions in demand estimation for  ...  We illustrate the challenges in Antitrust analysis of merger effects using sophisticated aggregate demand systems, such as the random-coefficient logit of Berry, Levinsohn, and Pakes (1995) .  ...  facing random-coefficient Logit demands.  ... 
doi:10.1257/aer.101.3.56 fatcat:pwbpdnxkxjde3maqrbo4or6b6u

Supplemental Material, jppm.17.057-web-appendix - Reducing Obesity by Taxing Soft Drinks: Tax Salience and Firms' Strategic Responses

Hualu Zheng, Lu Huang, William Ross
2019 Figshare  
Supplemental Material, jppm.17.057-web-appendix for Reducing Obesity by Taxing Soft Drinks: Tax Salience and Firms' Strategic Responses by Hualu Zheng, Lu Huang and William Ross in Journal of Public Policy & Marketing  ...  1 Online Appendix: The Demand Model and Model Identification The Demand Model Random Coefficients For our demand random coefficient logit model, we follow the specifications in the framework of Berry  ...  Consumer Choice and Market Share We normalize the indirect utility of nonpurchase decision to zero, 0 = 0 .  ... 
doi:10.25384/sage.8184803 fatcat:32krjepgpvcnbapmx4p3puavsu

Do media consumers really dislike advertising? An empirical assessment of the role of advertising in print media markets

Ulrich Kaiser, Minjae Song
2009 International Journal of Industrial Organization  
Demand for interior design magazines is not well identified. Our logit demand estimates are confirmed by logit demand models with random coefficients and by magazine-specific monopoly demand models.  ...  We estimate logit demand models separately for the six most important magazine segments in terms of circulation. We find little evidence for readers disliking advertising.  ...  Appendix C reports estimation results for three different specifications of the random coefficient logit model. In the first specification we put a random coefficient on advertising share only.  ... 
doi:10.1016/j.ijindorg.2008.09.003 fatcat:vfgbskh4mvhaxoxxbossv5yzbq

Limit Theorems for Estimating the Parameters of Differentiated Product Demand Systems

STEVE BERRY, OLIVER B. LINTON, ARIEL PAKES
2004 The Review of Economic Studies  
We specialise our distribution theory to the Berry, Levinsohn, and Pakes (1995) random coefficient logit model and a pure characteristic model.  ...  with the number of products within a given market.  ...  In particular we present results for a simple logit where the market shares are observed with sampling error, and then for a random coefficients logit with simulation error in the computed shares.  ... 
doi:10.1111/j.1467-937x.2004.00298.x fatcat:mrl4nlr26zh2ppmmgx75bwfa2q

WHAT HAPPENS WHEN DEMAND IS ESTIMATED WITH A MISSPECIFIED MODEL?*

DONGLING HUANG, CHRISTIAN ROJAS, FRANK BASS
2008 Journal of Industrial Economics  
Estimating demand with the 'wrong' model yields varying degrees of bias in estimated elasticities, but the logit model can yield unbiased estimates for a certain size ofthe assumed market potential.  ...  Merger simulations confirm the key importance of market potential in logit estimation suggesting that a discrete choice model may be preferable even when the discreteness ofthe purchase decision is questionable  ...  are: 1) if data is generated with a random coefficients model and then estimated with the same model (i.e., no misspecification), frequent convergence problems arise if a different set of random draws  ... 
doi:10.1111/j.1467-6451.2008.00361.x fatcat:ggpbyau5cbb7vjjhtop75fw3im

Preferences, Market Structure, and Welfare Evaluations in the Argentinean FFP Industry: A Case in Buenos Aires Province

Julia González, M. Victoria Lacaze
2012 Agribusiness  
The results suggest that consumer surplus would decrease with a merger between the two smaller firms of the market, and would increase if the market turned into a single-product firms industry.  ...  This paper analyzes the demand of frozen fried potatoes in an important city of Argentina, Mar del Plata, and the effect of changes in market structure on consumer welfare.  ...  Allocation of Supermercados Toledo branches in Mar del Plata, Argentina choice logit models Simple Simple Nested Random Coefficients Random Coefficients Utility space Characteristics space Taste heterogeneity  ... 
doi:10.1002/agr.21299 fatcat:xf6utmvajjhh7a5txpzjpbjklq

ESTIMATING THE DEMAND FOR BROADBAND SERVICES IN BRAZIL: ANALYSIS BY A DISCRETE-CHOICE MODEL

Tainá Leandro, Victor Gomes
2019 Revista de Economia Contemporânea  
In addition, the possibility of purchasing broadband services in tripleplay bundles has a positive effect on market share in those municipalities with two or more groups providing broadband services.  ...  Discrete-choice models were used to estimate the demand for broadband services in Brazil. Results indicate an elastic demand for fixed broadband.  ...  The parameters of interest have the expected sign for all estimates: the price coefficient is negative and the coefficient associated with ( ) / ln j g s has sign and value consistent with the random utility  ... 
doi:10.1590/198055272323 fatcat:ehyqrmrpsvadjndkmc2l6mnjhi

EFFECT OF ATTRIBUTE PERCEPTIONS ON MODE CHOICE BEHAVIOR IN A TRANSIT MARKET

Quentin K. WAN, Hong K. LO
2005 Journal of the Eastern Asia Society for Transportation Studies  
Random utility models are often used to model traveler mode choice behavior in the demand analysis of a transit system.  ...  In practice, however, often observed or published attribute values (e.g., fare) rather than perceived attribute values are used to estimate the utility.  ...  When the bias is zero and the variation is small, it is approximately the choice probability given by the logit model with the true attribute values.  ... 
doi:10.11175/easts.6.1740 fatcat:vphdpa3ggremdf7vii723t7moa

Merger Control in Differentiated-Product Industries [chapter]

2006 Recent Developments in Antitrust  
We estimate company (product) mark-ups consistent with a structural model of equilibrium, using demand primitives from a Nested Logit model and a Random Coefficient model.  ...  We propose the use of a structural approach to apply HHI thresholds based on profit shares rather than market shares.  ...  In this case demand primitives are estimated using a Random Coefficient model of demand incorporating data on consumer demographics and price-cost mark-ups are estimated jointly with demand consistent  ... 
doi:10.7551/mitpress/5810.003.0009 fatcat:lkvww5robjfvhf7ykfvrqbrfzq
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