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On Asymptotic Properties of the Parameters of Differentiated Product Demand and Supply Systems When Demographically-Categorized Purchasing Pattern Data are Available

Author

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  • Satoshi Myojo

    (Graduate School of Economics, Kobe University)

  • Yuichiro Kanazawa

    (University of Tsukuba)

Abstract

In this paper, we derive asymptotic theorems for the Petrin (2002) extension of the Berry, Levinsohn, and Pakes (BLP, 1995) framework to estimate demand-supply models with micro moments. The micro moments contain the information relating the consumer demographics to the characteristics of the products they purchase. With additional assumptions, the extended estimator is shown to be CAN and more efficient than the BLP estimator. We discuss the conditions under which these asymptotic theorems hold for the random coefficient logit model. We implement extensive simulation studies and confirm the benefit of the micro moments in estimating the random coefficient logit model.

Suggested Citation

  • Satoshi Myojo & Yuichiro Kanazawa, 2010. "On Asymptotic Properties of the Parameters of Differentiated Product Demand and Supply Systems When Demographically-Categorized Purchasing Pattern Data are Available," Discussion Papers 1009, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1009
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2010/1009.pdf
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    References listed on IDEAS

    as
    1. K. Sudhir, 2001. "Competitive Pricing Behavior in the Auto Market: A Structural Analysis," Marketing Science, INFORMS, vol. 20(1), pages 42-60, January.
    2. Steve Berry & Oliver B. Linton & Ariel Pakes, 2004. "Limit Theorems for Estimating the Parameters of Differentiated Product Demand Systems," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(3), pages 613-654.
    3. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    4. Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
    5. Pakes, Ariel & Pollard, David, 1989. "Simulation and the Asymptotics of Optimization Estimators," Econometrica, Econometric Society, vol. 57(5), pages 1027-1057, September.
    6. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
    7. Amil Petrin, 2002. "Quantifying the Benefits of New Products: The Case of the Minivan," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 705-729, August.
    8. Guido W. Imbens & Tony Lancaster, 1994. "Combining Micro and Macro Data in Microeconometric Models," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(4), pages 655-680.
    9. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    10. K. Sudhir, 2001. "Competitive Pricing Behavior in the US Auto Market: A Structural Analysis," Yale School of Management Working Papers ysm228, Yale School of Management.
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