IDEAS home Printed from https://ideas.repec.org/p/kud/kuiedp/1802.html
   My bibliography  Save this paper

Demand Models for Differentiated Goods with Complementarity and Substitutability

Author

Listed:
  • Mogens Fosgerau

    (Department of Economics, University of Copenhagen)

  • André de Palma

    (CREST, ENS Paris-Saclay, University Paris-Saclay)

  • Julien Monardo

    (CREST, ENS Paris-Saclay, University Paris-Saclay)

Abstract

We develop a class of demand models for differentiated products. The new models facilitate the BLP method (Berry et al., 1995) while numerical inversion of the demand system is not required. They can accommodate rich patterns of substitution and complementarity while being easily estimated with standard regression techniques and allowing very large choice sets. We use the new models to describe markets for differentiated products that exhibit segmentation according to several dimensions and illustrate their application by estimating demand for cereals in Chicago.

Suggested Citation

  • Mogens Fosgerau & André de Palma & Julien Monardo, 2018. "Demand Models for Differentiated Goods with Complementarity and Substitutability," Discussion Papers 18-02, University of Copenhagen. Department of Economics.
    • Handle: RePEc:kud:kuiedp:1802
    as

    Download full text from publisher

    File URL: https://www.economics.ku.dk/research/publications/wp/dp_2018/papers/1802.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Douglas Almond & Bhashkar Mazumder, 2013. "Fetal Origins and Parental Responses," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 37-56, May.
    2. Almond, Douglas & Currie, Janet, 2011. "Human Capital Development before Age Five," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 15, pages 1315-1486, Elsevier.
    3. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2007. "From the Cradle to the Labor Market? The Effect of Birth Weight on Adult Outcomes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(1), pages 409-439.
    4. Douglas Almond & Janet Currie & Valentina Duque, 2018. "Childhood Circumstances and Adult Outcomes: Act II," Journal of Economic Literature, American Economic Association, vol. 56(4), pages 1360-1446, December.
    5. Janet Currie, 2011. "Inequality at Birth: Some Causes and Consequences," American Economic Review, American Economic Association, vol. 101(3), pages 1-22, May.
    6. Janet Currie & Hannes Schwandt, 2016. "The 9/11 Dust Cloud and Pregnancy Outcomes: A Reconsideration," Journal of Human Resources, University of Wisconsin Press, vol. 51(4), pages 805-805-831.
    7. Janet Currie & Enrico Moretti, 2007. "Biology as Destiny? Short- and Long-Run Determinants of Intergenerational Transmission of Birth Weight," Journal of Labor Economics, University of Chicago Press, vol. 25(2), pages 231-264.
    8. Paul Bingley & Lorenzo Cappellari, 2019. "Correlation of Brothers' Earnings and Intergenerational Transmission," The Review of Economics and Statistics, MIT Press, vol. 101(2), pages 370-383, May.
    9. Black, Sandra E. & Devereux, Paul J., 2011. "Recent Developments in Intergenerational Mobility," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 16, pages 1487-1541, Elsevier.
    10. Douglas Almond & Kenneth Y. Chay & David S. Lee, 2005. "The Costs of Low Birth Weight," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 1031-1083.
    11. Douglas Almond & Janet Currie, 2011. "Killing Me Softly: The Fetal Origins Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 153-172, Summer.
    12. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2016. "Does Grief Transfer across Generations? Bereavements during Pregnancy and Child Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 8(1), pages 193-223, January.
    13. repec:ucn:wpaper:10197/317 is not listed on IDEAS
    14. Douglas Almond & Bhashkar Mazumder, 2011. "Health Capital and the Prenatal Environment: The Effect of Ramadan Observance during Pregnancy," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 56-85, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Allen, Roy, 2022. "Injectivity and the law of demand," Economics Letters, Elsevier, vol. 215(C).
    2. Roy Allen & John Rehbeck, 2020. "Hicksian complementarity and perturbed utility models," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 245-261, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kreiner, Claus Thustrup & Sievertsen, Hans Henrik, 2020. "Neonatal health of parents and cognitive development of children," Journal of Health Economics, Elsevier, vol. 69(C).
    2. Mark E. McGovern, 2019. "How much does birth weight matter for child health in developing countries? Estimates from siblings and twins," Health Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 3-22, January.
    3. Buckles, Kasey, 2017. "Maternal Socio-Economic Status and the Well-Being of the Next Generation(s)," IZA Discussion Papers 10714, Institute of Labor Economics (IZA).
    4. Ji Yan, 2017. "Healthy Babies: Does Prenatal Care Really Matter?," Working Papers 17-09, Department of Economics, Appalachian State University.
    5. Verónica Amarante & Marco Manacorda & Edward Miguel & Andrea Vigorito, 2016. "Do Cash Transfers Improve Birth Outcomes? Evidence from Matched Vital Statistics, Program, and Social Security Data," American Economic Journal: Economic Policy, American Economic Association, vol. 8(2), pages 1-43, May.
    6. Mark E. Mcgovern, 2013. "Still Unequal at Birth: Birth Weight,Socio-economic Status and Outcomes at Age 9," The Economic and Social Review, Economic and Social Studies, vol. 44(1), pages 53-84.
    7. Gabriella Conti & Mark Hanson & Hazel Inskip & Sarah Crozier & Cyrus Cooper & Keith Godfrey, 2018. "Beyond Birth Weight: The Origins of Human Capital," Working Papers 2018-089, Human Capital and Economic Opportunity Working Group.
    8. Richard Akresh & Sonia Bhalotra & Marinella Leone & Una Osili, 2023. "First- and Second-Generation Impacts of the Biafran War," Journal of Human Resources, University of Wisconsin Press, vol. 58(2), pages 488-531.
    9. Noghanibehambari, Hamid & Engelman, Michal, 2022. "Social insurance programs and later-life mortality: Evidence from new deal relief spending," Journal of Health Economics, Elsevier, vol. 86(C).
    10. Gabriella Conti, 2013. "The Developmental Origins of Health Inequality," Research on Economic Inequality, in: Health and Inequality, volume 21, pages 285-309, Emerald Group Publishing Limited.
    11. Noghanibehambari, Hamid, 2022. "Intergenerational health effects of Medicaid," Economics & Human Biology, Elsevier, vol. 45(C).
    12. Chyn, Eric & Gold, Samantha & Hastings, Justine, 2021. "The returns to early-life interventions for very low birth weight children," Journal of Health Economics, Elsevier, vol. 75(C).
    13. Carl-Johan Dalgaard & Casper Worm Hansen & Holger Strulik, 2017. "Accounting for Fetal Origins: Health Capital vs. Health Deficits," Discussion Papers 17-11, University of Copenhagen. Department of Economics.
    14. Lin, Ming-Jen & Liu, Elaine M., 2014. "Does in utero exposure to Illness matter? The 1918 influenza epidemic in Taiwan as a natural experiment," Journal of Health Economics, Elsevier, vol. 37(C), pages 152-163.
    15. Richard Akresh & Sonia Bhalotra & Marinella Leone & Una Osili, 2017. "Hunger Games: First and Second Generation Impacts of the Biafran War," HiCN Working Papers 254, Households in Conflict Network.
    16. Rau, Tomás & Sarzosa, Miguel & Urzúa, Sergio, 2021. "The children of the missed pill," Journal of Health Economics, Elsevier, vol. 79(C).
    17. Carl‐Johan Dalgaard & Casper Worm Hansen & Holger Strulik, 2021. "Fetal origins—A life cycle model of health and aging from conception to death," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1276-1290, June.
    18. Janet Currie & Tom Vogl, 2013. "Early-Life Health and Adult Circumstance in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 1-36, May.
    19. Cassandra Robertson & Rourke O’Brien, 2018. "Health Endowment at Birth and Variation in Intergenerational Economic Mobility: Evidence From U.S. County Birth Cohorts," Demography, Springer;Population Association of America (PAA), vol. 55(1), pages 249-269, February.
    20. Foureaux Koppensteiner, Martin & Manacorda, Marco, 2016. "Violence and birth outcomes: Evidence from homicides in Brazil," Journal of Development Economics, Elsevier, vol. 119(C), pages 16-33.

    More about this item

    Keywords

    Demand estimation; Differentiated products; Discrete choice; Generalized entropy; Representative consumer;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L - Industrial Organization

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kud:kuiedp:1802. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Hoffmann (email available below). General contact details of provider: https://edirc.repec.org/data/okokudk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.