A Research Assistant's Guide to Random Coefficients Discrete Choice Models of Demand

42 Pages Posted: 7 Jul 2000 Last revised: 11 Aug 2010

See all articles by Aviv Nevo

Aviv Nevo

Northwestern University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: February 1998


The study of differentiated-products markets is a central part of empirical industrial organization. Questions regarding market power, mergers, innovation, and valuation of new brands are addressed using cutting-edge econometric methods and relying on economic theory. Unfortunately, difficulty of use and computational costs have limited the scope of application of recent developments in one of the main methods for estimating demand for differentiated products: random coefficients discrete choice models. As our understanding of these models of demand has increased, both the difficulty and costs have been greatly reduced. This paper carefully discusses the latest innovations in these methods with the hope of (1) increasing the understanding, and therefore the trust, among researchers who never used these methods, and (2) reducing the difficulty of use, and therefore aiding in realizing the full potential of these methods.

Suggested Citation

Nevo, Aviv, A Research Assistant's Guide to Random Coefficients Discrete Choice Models of Demand (February 1998). NBER Working Paper No. t0221. Available at SSRN: https://ssrn.com/abstract=226631

Aviv Nevo (Contact Author)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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