Robust firm pricing with panel data

Benjamin R. Handel, Kanishka Misra and James W. Roberts

Journal of Econometrics, 2013, vol. 174, issue 2, 165-185

Abstract: Firms often have imperfect information about demand for their products. We develop an integrated econometric and theoretical framework to model firm demand assessment and subsequent pricing decisions with limited information. We introduce a panel data discrete choice model whose realistic assumptions about consumer behavior deliver partially identified preferences and thus generate ambiguity in the firm pricing problem. We use the minimax-regret criterion as a decision-making rule for firms facing this ambiguity. We illustrate the framework’s benefits relative to the most common discrete choice analysis approach through simulations and empirical examples with field data.

Keywords: Firm pricing; Minimax-regret; Partial identification; Panel data (search for similar items in EconPapers)
JEL-codes: C14 C44 L11 L13 L15 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:174:y:2013:i:2:p:165-185

DOI: 10.1016/j.jeconom.2013.02.007

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