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Demand systems for market shares

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  • Fosgerau, Mogens
  • de Palma, André

Abstract

We formulate a family of direct utility functions for the consumption of a differentiated good. This is used to generate a family of demand systems with flexible substitution patterns. Demand models for market shares can be estimated by regression enabling the use of instrumental variables. Models for microdata can be estimated with maximum likelihood. Our direct utility functions are based on a generalization of the Shannon entropy. They include dual representations of all additive random utility discrete choice models and more.

Suggested Citation

  • Fosgerau, Mogens & de Palma, André, 2015. "Demand systems for market shares," MPRA Paper 62106, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:62106
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    References listed on IDEAS

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    More about this item

    Keywords

    market shares; product differentiation; duality; discrete choice; entropy;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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