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On the Identification of the Costs of Simultaneous Search

Author

Listed:
  • Jose L. Moraga-Gonzalez

    (ICREA, IESE Business School, and University of Groningen)

  • Zsolt Sandor

    (University of Groningen)

  • Matthijs R. Wildenbeest

    (Kelley School of Business, Indiana University)

Abstract

This paper studies the identification of the costs of simultaneous search in portfolio problems (Chade and Smith, 2006). We show that market shares data from a single market do not provide sufficient information to identify the search cost distribution in any interval, even if utilitydistributions are known to the econometrician. We then show that by pooling data from markets wherethe alternatives that similar decision makers confront vary, the search cost distribution and theutility parameters of the logit demand model can be identified.

Suggested Citation

  • Jose L. Moraga-Gonzalez & Zsolt Sandor & Matthijs R. Wildenbeest, 2010. "On the Identification of the Costs of Simultaneous Search," Tinbergen Institute Discussion Papers 10-066/1, Tinbergen Institute, revised 12 May 2011.
    • Handle: RePEc:tin:wpaper:20100066
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    References listed on IDEAS

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    1. Asher Wolinsky, 1986. "True Monopolistic Competition as a Result of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(3), pages 493-511.
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    3. José Luis Moraga‐González & Zsolt Sándor & Matthijs R. Wildenbeest, 2013. "Semi‐Nonparametric Estimation Of Consumer Search Costs," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(7), pages 1205-1223, November.
    4. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(4), pages 869-891.
    5. Simon P. Anderson & Regis Renault, 1999. "Pricing, Product Diversity, and Search Costs: A Bertrand-Chamberlin-Diamond Model," RAND Journal of Economics, The RAND Corporation, vol. 30(4), pages 719-735, Winter.
    6. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    7. Stephan Seiler, 2010. "The impact of search costs on consumer behavior: a dynamic approach," 2010 Meeting Papers 559, Society for Economic Dynamics.
    8. Nitin Mehta & Surendra Rajiv & Kannan Srinivasan, 2003. "Price Uncertainty and Consumer Search: A Structural Model of Consideration Set Formation," Marketing Science, INFORMS, vol. 22(1), pages 58-84, June.
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    Cited by:

    1. Lu, Zhentong, 2022. "Estimating multinomial choice models with unobserved choice sets," Journal of Econometrics, Elsevier, vol. 226(2), pages 368-398.

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    More about this item

    Keywords

    search costs; portfolio choice; non-parametric identification; logit demand;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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