Identification in Differentiated Products Markets

Steven Berry () and Philip Haile

No 2019, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Empirical models of demand for -- and, often, supply of -- differentiated products are widely used in practice, typically employing parametric functional forms and distributions of consumer heterogeneity. We review some recent work studying identification in a broad class of such models. This work shows that parametric functional forms and distributional assumptions are not essential for identification. Rather, identification relies primarily on the standard requirement that instruments be available for the endogenous variables -- here, typically, prices and quantities. We discuss the kinds of instruments needed for identification and how the reliance on instruments can be reduced by nonparametric functional form restrictions or better data. We also discuss results on discrimination between alternative models of oligopoly competition.

Keywords: Nonparametric identification; Instrumental variables; Discrete choice; Differentiated products oligopoly; Demand and supply; Firm conduct (search for similar items in EconPapers)
JEL-codes: C3 D12 D22 D4 L1 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2015-08
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Identification in Differentiated Products Markets (2016)
Working Paper: Identification in differentiated product markets (2015)
Working Paper: Identification in differentiated product markets (2015)
Working Paper: Identification in Differentiated Products Markets (2015)
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