In this paper we discuss statistical inference associated with the theoretical model developed in Part I. Specifically, we demonstrate how the relationship between the distribution of prices and unit values can be exploited to estimate some of the structural parameters. These estimates are essential for constructing price indexes that account for unobservable taste-shifters and quality/location attributes. Finally, the remaining structural parameters can be estimated from data on demand by inserting the price indexes into the corresponding demand system. Finally, we discuss the estimation procedure in the discrete case when consumers choose one unit of a variant at a time.
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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number
167.
Find related papers by JEL classification: C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
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