Unobserved Preference Heterogeneity in Demand Using Generalized Random Coefficients

Arthur Lewbel and Krishna Pendakur

No 791, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: We propose a generalization of random coefficients models, in which the regression model is an unknown function of a vector of regressors, each of which is multiplied by an unobserved error. We also investigate a more restrictive model which is additive (or additive with interactions) in unknown functions of each regressor multiplied by its error. We show nonparametric identification of these models. In addition to providing a natural generalization of random coefficients, we provide economic motivations for the model based on demand system estimation. In these applications, the random coefficients can be interpreted as random utility parameters that take the form of Engel scales or Barten scales, which in the past were estimated as deterministic preference heterogeneity or household technology parameters. We apply these results to consumer surplus and related welfare calculations.

Keywords: unoberved heterogeneity; nonseparable errors; random utility parameters; random coefficients; equivalence scales; consumer surplus; welfare calculations. (search for similar items in EconPapers)
JEL-codes: C14 C21 D12 D13 (search for similar items in EconPapers)
Date: 2012-02-15, Revised 2013-07-01
New Economics Papers: this item is included in nep-ecm
Note: Previously circulated as Generalized Random Coefficients With Equivalence Scale Applications
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Unobserved Preference Heterogeneity in Demand Using Generalized Random Coefficients (2017)
Working Paper: Unobserved Preference Heterogeneity in Demand Using Generalized Random Coefficients (2015)
Working Paper: Unobserved Preference Heterogeneity in Demand Using Generalized Random Coefficients (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:791

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