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On large market asymptotics for spatial price competition models

Author

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  • Otsu, Taisuke
  • Sunada, Keita

Abstract

In spatial price competition models, demand factors have correlation with prices through the markup so that their identification power decreases as the number of product grows. Asymptotic results indicate lack of consistency of the estimator due to weak instruments.

Suggested Citation

  • Otsu, Taisuke & Sunada, Keita, 2024. "On large market asymptotics for spatial price competition models," LSE Research Online Documents on Economics 120588, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120588
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    File URL: http://eprints.lse.ac.uk/120588/
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    References listed on IDEAS

    as
    1. Joachim Freyberger, 2017. "On Completeness and Consistency in Nonparametric Instrumental Variable Models," Econometrica, Econometric Society, vol. 85, pages 1629-1644, September.
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    3. Joris Pinkse & Margaret E. Slade & Craig Brett, 2002. "Spatial Price Competition: A Semiparametric Approach," Econometrica, Econometric Society, vol. 70(3), pages 1111-1153, May.
    4. Sukjin Han, 2020. "Nonparametric estimation of triangular simultaneous equations models under weak identification," Quantitative Economics, Econometric Society, vol. 11(1), pages 161-202, January.
    5. Timothy B. Armstrong, 2016. "Large Market Asymptotics for Differentiated Product Demand Estimators With Economic Models of Supply," Econometrica, Econometric Society, vol. 84, pages 1961-1980, September.
    6. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    7. Harrison Fell & Alan C. Haynie, 2013. "Spatial Competition With Changing Market Institutions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(4), pages 702-719, June.
    8. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    9. Pinkse, Joris & Slade, Margaret E., 2004. "Mergers, brand competition, and the price of a pint," European Economic Review, Elsevier, vol. 48(3), pages 617-643, June.
    10. Margaret E. Slade, 2004. "Market Power and Joint Dominance in U.K. Brewing," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 133-163, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    spatial price competition; weak instruments; Elsevier deal;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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