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Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market

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Author Info
Steven Berry
James Levinsohn
Ariel Pakes

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Abstract

In this paper, we exploit new sources of cross-sectional data to estimate a detailed product-level demand system for new passenger vehicles. We use four data sources: on the characteristics of products, on the attributes of the U.S. population of households, on the match between the first and second vehicle choices of the household, and on the match between households attributes and first choice vehicles. We show that these data solve some, but not all, of the traditional problems in estimating differentiated products demand systems and indicate which data sources are important for which problem. The data is rich enough to reveal a rather complex substitution pattern, requiring a quite general modeling framework. Together the data and model make a detailed analysis of industry demand possible.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6481.

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Date of creation: Mar 1998
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Handle: RePEc:nbr:nberwo:6481

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Find related papers by JEL classification:
D4 - Microeconomics - - Market Structure and Pricing
L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

References listed on IDEAS
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  9. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-84, July. [Downloadable!] (restricted)
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  14. Hausman, Jerry A & Wise, David A, 1978. "A Conditional Probit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Econometrica, Econometric Society, vol. 46(2), pages 403-26, March. [Downloadable!] (restricted)
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  15. Pakes, Ariel & Pollard, David, 1989. "Simulation and the Asymptotics of Optimization Estimators," Econometrica, Econometric Society, vol. 57(5), pages 1027-57, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Patrick Paul Walsh & Franco Mariuzzo & Ciara Whelan, 2005. "Merger Control in Differentiated Product," Trinity Economics Papers tep10, Trinity College Dublin, Department of Economics. [Downloadable!]
    Other versions:
  2. Susan Athey & Guido Imbens, 2006. "Discrete Choice Models with Multiple Unobserved Choice Characteristics," Levine's Bibliography 122247000000001040, UCLA Department of Economics. [Downloadable!]
  3. Aviv Nevo, 2003. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Microeconomics 0303006, EconWPA. [Downloadable!]
  4. Jean Marie Abraham & Martin Gaynor & William B Vogt, 2003. "Entry and Competition in Local Hospital Markets," The Centre for Market and Public Organisation 03/088, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  5. Bajari, Patrick & Benkard, C. Lanier, 2004. "Demand Estimation With Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," Research Papers 1842, Stanford University, Graduate School of Business. [Downloadable!]
  6. C. Lanier Benkard & Patrick Bajari, 2004. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," NBER Working Papers 10278, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. FÈVE, Frédérique & FÈVE, Patrick & FLORENS, Jean-Pierre, 2002. "Attribute Choices and Structural Econometrics of Price Elasticity of Demand," IDEI Working Papers 155, Institut d'Économie Industrielle (IDEI), Toulouse, revised 2003. [Downloadable!]
  8. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2005. "Embedding Consumer Taste for Location into a Structural Model of Equilibrium," Working Papers 200503, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  9. Justine S. Hastings & Thomas J. Kane & Douglas O. Staiger, 2006. "Preferences and Heterogeneous Treatment Effects in a Public School Choice Lottery," NBER Working Papers 12145, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Mohammad Arzaghi, 2005. "Quality Sorting and Networking: Evidence from the Advertising Agency Industry," Working Papers 05-16, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
  11. María Moral & Jordi Jaumandreu, 2007. "Automobile demand, model cycle and age effects," Spanish Economic Review, Springer, vol. 9(3), pages 193-218, September. [Downloadable!] (restricted)
  12. Michelle Sovinsky Goeree, 2005. "Advertising in the US Personal Computer Industry," Industrial Organization 0503002, EconWPA. [Downloadable!]
  13. Franco Mariuzzo & Patrick Paul Walsh & Ciara Whelan, 2004. "EU Merger Control in Differentiated Product Industries," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  14. Smith, V. Kerry & Banzhaf, H. Spencer, 2003. "Meta Analysis in Model Implementation: Choice Sets and the Valuation of Air Quality Improvements," Discussion Papers dp-03-61, Resources For the Future. [Downloadable!]
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  15. Jaumandreu, Jordi & Moral, Maria Jose, 2006. "Identifying behaviour in a multiproduct oligopoly: Incumbents reaction to tariffs dismantling," MPRA Paper 1248, University Library of Munich, Germany. [Downloadable!]
  16. Reiss, Peter C. & Wolak, Frank A., 2003. "Structural Econometric Modeling: Rationales and Examples from Industrial Organization," Research Papers 1831, Stanford University, Graduate School of Business. [Downloadable!]
  17. Struben, Jeroen J.R.,, 2007. "Identifying Challenges for Sustained Adoption of Alternative Fuel Vehicles and Infrastructure," Working papers 37306, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  18. Franco Mariuzzo, 2005. "The Efect of Differences in Buyer and Non-Buyer Characteristics on Equilibrium Price-Elasticities: an Empirical Study on the Italian Automobile Market," Trinity Economics Papers tep13, Trinity College Dublin, Department of Economics. [Downloadable!]
  19. Claudio Agostini & Soraphol Tulayasathien, . "The Impact of State Corporate Taxes on FDI Location," ILADES-Georgetown University Working Papers inv146, Ilades-Georgetown University, School of Economics and Bussines. [Downloadable!]
    Other versions:
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