Endogenous product choice : a progress report
Crawford, Gregory S., Tosini, Nicola and Waehrer, Keith (2011) Endogenous product choice : a progress report. Working Paper. Coventry: Department of Economics, University of Warwick. Warwick economics research paper series (TWERPS) (Number 979). (Unpublished)
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Empirical models of differentiated product demand are widely used by both academics and practitioners. While these methods treat carefully the potential endogeneity of price, until recently they have assumed the number and characteristics of the products offered by firms are exogenous. This paper presents a progress report on an ongoing research agenda to address this issue. First, it summarizes how the appropriate choice of “orthogonal” instruments can yield consistent estimates of own and cross-price elasticities in the presence of endogenous product characteristics. Second, it summarizes how to measure “quality markups” and the welfare consequences of endogenous product quality in U.S. cable television markets. Related papers and extensions to consider multiple product characteristics and dynamics are also discussed.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Economics -- Mathematical models, Pricing, Business enterprises -- Data processing|
|Series Name:||Warwick economics research paper series (TWERPS)|
|Publisher:||Department of Economics, University of Warwick|
|Place of Publication:||Coventry|
|Official Date:||18 December 2011|
|Number of Pages:||14|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Funder:||Economic and Social Research Council (Great Britain) (ESRC)|
|Grant number:||RES-062-23-2586 (ESRC)|
Ackerberg, D., Gregory S. Crawford, and Jinyong Hahn, “Orthogonal Instruments: Es-timating Price Elasticities in the Presence of Endogenous Product Characteristics,” 2011. Working Paper, University of Warwick.
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