Conduct parameter estimation in homogeneous goods markets with equilibrium existence and uniqueness conditions: the case of log-linear specification

Suguru Otani () and Yuri Matsumura ()
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Suguru Otani: University of Tokyo
Yuri Matsumura: Rice University

Economics Bulletin, 2025, vol. 45, issue 4, 1755 - 1761

Abstract: We propose a constrained generalized method of moments (GMM) estimator with some equilibrium uniqueness conditions for estimating the conduct parameter in a log-linear model with homogeneous goods markets. Monte Carlo simulations demonstrate that merely imposing parameter restrictions leads to not just inaccurate estimations but also some numerical issues, and adding the equilibrium uniqueness conditions resolves them. We also suggest a formulation of the GMM estimation to further avoid the numerical issues.

Keywords: Conduct parameters; Homogeneous Goods Market; Mathematical Programming with Equilibrium Constraints; Monte Carlo simulation (search for similar items in EconPapers)
JEL-codes: C5 L1 (search for similar items in EconPapers)
Date: 2025-12-30
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