Structural Econometric Modeling in Industrial Organization and Quantitative Marketing : Theory and Applications / Ali Hortaçsu and Joonhwi Joo.

Format:

Book

Author/Creator:

Hortaçsu, Ali, author.

Joo, Joonhwi, 1986- author.

Language:

English

Subjects (All):

Econometric models--Case studies.

Econometric models.

Industrial organization (Economic theory)--Econometric models--Case studies.

Industrial organization (Economic theory).

Marketing--Mathematical models.

Marketing.

Physical Description:

1 online resource (281 pages)

Edition:

First edition.

Place of Publication:

Princeton, New Jersey : Princeton University Press, [2023]

Summary:

"A concise and rigorous introduction to widely used approaches in structural econometric modeling Structural econometric modeling specifies the structure of an economic model and estimates the model's parameters from real-world data. Structural econometric modeling enables better economic theory-based predictions and policy counterfactuals. This book offers a primer on recent developments in these modeling techniques, which are used widely in empirical industrial organization, quantitative marketing, and related fields. It covers such topics as discrete choice modeling, demand modes, estimation of the firm entry models with strategic interactions, consumer search, and theory/empirics of auctions. The book makes highly technical material accessible to graduate students, describing key insights succinctly but without sacrificing rigor. Concise overview of the most widely used structural econometric models Rigorous and systematic treatment of the topics, emphasizing key insights Coverage of demand estimation, estimation of static and dynamic game theoretic models, consumer search, and auctions Focus on econometric models while providing concise reviews of relevant theoretical models"-- Provided by publisher.

"Within economics a relatively new way of modeling has dominated important subfields: structural modeling. The goal of this book is to give an overview on how the various streams of literatures in empirical industrial organization and quantitative marketing use structural econometric modeling to estimate the model parameters, give the economic-model-based predictions, and conduct the policy counterfactual experiments. The traditional way of modelling, called "reduced-form" builds its models from simple relationships between variables of interests, which are mostly linear. Structural econometric models start by specifying the structure of the economic model, and the variables are calibrated from real-world data. This method enables better predictions and policy counterfactuals, and has other benefits. When considering a hypothetical policy change using the traditional modeling method ("reduced form"), researchers can often only estimate whether an effect would be positive or negative. With a structural econometric model using real-world data, a researcher can obtain the magnitude of the effects resulting from a hypothetical change. But the ability of quantifying the effects associated with a hypothetical policy change comes with its costs: the nonlinearity from explicitly specifying the possible relationships makes the structural econometric approach generally much more difficult to implement than its reduced-form counterpart. Therefore this book will provide a much-needed resource on how to use these methods effectively in the fields in which they been used the most, empirical industrial organization and quantitative marketing"-- Provided by publisher.

Contents:

Cover

Contents

Preface

1. Introduction: Structural Econometric Modeling

1.1 Model

1.1.1 Scientific Model and Economic Model

1.1.2 Predictive Model and Causal Model

1.2 Econometrics

1.3 Structure

1.4 Debate around the Structural Econometric Modeling Approach

1.5 Outline of This Book

2. Static and Dynamic Discrete Choice

2.1 Binary Choice

2.1.1 Motivation: Linear Probability Model

2.1.2 Binary Logit and Binary Probit Model

2.1.3 Marginal Effects

2.2 Multiple Choice: Random Utility Maximization Framework

2.2.1 Preliminary Results: Type I Extreme Value Distribution and Its Properties

2.2.2 The Simple Logit Model

2.2.3 Independence of Irrelevant Alternatives and the Nested Logit Model

2.2.4 Discussion

2.3 Single-Agent Dynamic Discrete Choice

2.3.1 Full-Solution Method with Fixed-Point Iteration

2.3.2 Estimation with Conditional Choice Probability Inversion

2.3.3 Nested Pseudo-Likelihood Estimation

2.3.4 Extension to Incorporate Unobserved State Variables

2.3.5 (Non)-identification of the Discount Factor

3. Demand Estimation Using Market-Level Data

3.1 Product-Space Approach

3.1.1 Linear and Log-Linear Demand Model

3.1.2 The Almost Ideal Demand System

3.1.3 Further Discussion of the Product-Space Approach

3.2 Characteristics-Space Approach I: Static Logit Demand Models

3.2.1 Microfoundation: Discrete-Choice Random Utility Maximization

3.2.2 Logit Demand Models with Aggregate Market Data

3.2.3 Further Discussion of the Static Logit Demand Models

3.3 Characteristics-Space Approach II: Extensions of the Static Logit Demand Models

3.3.1 Accommodating Zero Market Shares

3.3.2 Characteristics-Space Approach without Random Utility Shocks

4. Estimation of Discrete-Game Models

4.1 Estimation of Discrete-Game Models with Cross-Sectional Data

4.1.1 Static Discrete Games with Complete Information

4.1.2 Static Discrete Games with Incomplete Information

4.1.3 Further Discussion of the Estimation of Game Models with Cross-Sectional Data

4.2 Estimation of Dynamic Discrete-Game Models

4.2.1 Industry Dynamics in an Oligopolistic Market and the Markov Perfect Equilibrium

4.2.2 Estimation Frameworks of Dynamic Discrete Games

4.2.3 Further Issues and Discussion of Dynamic Game Models Estimation

5. Empirical Frameworks of Consumer Search

5.1 Utility Specification and Some Preliminary Results

5.1.1 Utility Specification in Consumer Search Models

5.1.2 Some Preliminary Results on Stochastic Dominance

5.2 Classical Search-Theoretic Models: Sequential Search and Simultaneous Search

5.2.1 Sequential Search

5.2.2 Simultaneous Search

5.3 Price Dispersion in the Market Equilibrium and Search Cost Identification with Price Data

Notes:

Includes bibliographical references and index.

Description based on publisher supplied metadata and other sources.

Description based on print version record.

ISBN:

9780691251004

0691251002

OCLC:

1376938092