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Measuring Substitution Patterns in Differentiated-Products Industries / Amit Gandhi, Jean-François Houde.
- Format:
- Book
- Author/Creator:
- Gandhi, Amit.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w26375.
- NBER working paper series no. w26375
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2019.
- Summary:
- We study the estimation of substitution patterns within the discrete choice framework developed by Berry (1994) and Berry, Levinsohn, and Pakes (1995). Our objective is to demonstrate the consequences of using weak instruments in this non-linear GMM context, and propose a new class of instruments that are designed to avoid weak IV and can be used to estimate a large family of models with aggregate data. We argue that strong instruments should reflect the (exogenous) degree of differentiation of each product in a market (Differentiation IVs), and provide a series of examples to illustrate the performance of simple instrument functions.
- Notes:
- Print version record
- October 2019.
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