Endogenous product choice: A progress report

Gregory Crawford

International Journal of Industrial Organization, 2012, vol. 30, issue 3, 315-320

Abstract: Empirical models of differentiated product demand are widely used by both academics and practitioners. While these methods treat carefully the potential endogeneity of price, until recently they have assumed the number and characteristics of the products offered by firms are exogenous. This paper presents a progress report on an ongoing research agenda to address this issue. First, it summarizes how the appropriate choice of “orthogonal” instruments can yield consistent estimates of own and cross-price elasticities in the presence of endogenous product characteristics. Second, it summarizes how to measure “quality markups” and the welfare consequences of endogenous product quality in U.S. cable television markets. Related papers and extensions to consider multiple product characteristics and dynamics are also discussed.

Keywords: Endogenous product choice; Endogenous product characteristics; Endogenous quality; Orthogonal instruments; Welfare; Cable television (search for similar items in EconPapers)
JEL-codes: C31 C52 L15 L40 L82 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:3:p:315-320

DOI: 10.1016/j.ijindorg.2011.12.006

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