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Ulric B. and Evelyn L. Bray Social Sciences Seminar

Wednesday, May 17, 2023
4:00pm to 5:00pm
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Baxter Lecture Hall
Nonparametric Identification of Differentiated Products Demand Using Micro Data
Steven Berry, David Swensen Professor of Economics and Jeffrey Talpins Faculty Director of the Tobin Center for Economic Policy, Yale University,

Abstract: We examine identification of differentiated products demand when one has "micro data" linking the characteristics and choices of individual consumers. Our model nests standard specifications featuring rich observed and unobserved consumer heterogeneity as well as product/market-level unobservables that introduce the problem of econometric endogeneity. Previous work establishes identification of such models using marketlevel data and instruments for all prices and quantities. Micro data provides a panel structure that facilitates richer demand specifications and reduces requirements on both the number and types of instrumental variables. We address identification of demand in the standard case in which non-price product characteristics are assumed exogenous, but also cover identification of demand elasticities and other key features when these product characteristics are endogenous and not instrumented. Wediscuss implications of these results for applied work.

Joint work with Philip A. Haile.

For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at [email protected].