Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market
Posted: 26 Jan 2004
In this paper, we consider how rich sources of information on consumer choice can help to identify demand parameters in a widely used class of differentiated products demand models. Most important, we show how to use "second-choice" data on automotive purchases to obtain good estimates of substitution patterns in the automobile industry. We use our estimates to make out-of-sample predictions about important recent changes in industry structure.
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