Identification and Estimation of Online Price Competition with an Unknown Number of Firms
23 Pages Posted: 22 Mar 2016 Last revised: 12 Apr 2017
Date Written: August 1, 2015
This paper considers identification and estimation of a general model for online price competition. We show that when the number of competing firms is unknown, the underlying parameters of the model can still be identified and estimated employing recently developed results on measurement errors. We illustrate our methodology using UK data for personal digital assistants and employ the estimates to simulate competitive effects. Our results reveal that heightened competition has differential effects on the prices paid by different consumer segments.
Keywords: E-Retail Markets, Nonparametric Identification, Structural Estimation
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