The Outside Good Bias in Logit Models of Demand with Aggregate Data

Dongling Huang () and Christian Rojas ()
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Dongling Huang: Rensselaer Polytechnic Institute
Christian Rojas: University of Massachusetts Amherst

Economics Bulletin, 2013, vol. 33, issue 1, 198-206

Abstract: The logit model is the most popular tool for estimating demand in differentiated products markets. However, in its aggregate version, practitioners have to “guess” the size outside good. We propose a way to remove the bias created by an inaccurate guess in simpler versions of the model.

Keywords: Logit model; demand estimation; outside good; differentiated products (search for similar items in EconPapers)
JEL-codes: C1 D4 (search for similar items in EconPapers)
Date: 2013-01-23
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Citations: View citations in EconPapers (10)

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