Demand estimation with infrequent purchases and small market sizes
We propose a demand estimation method that allows for a large number of zerosale observations, rich unobserved heterogeneity, and endogenous prices. We do so by modeling small market sizes through Poisson arrivals. Each of these arriving consumers solves a standard discrete choice problem. We presen...
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| Veröffentlicht in: | Quantitative economics 2023-11, Vol.14 (4), p.1251-1294 |
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| container_title | Quantitative economics |
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| creator | Hortaçsu, Ali Natan, Olivia R Parsley, Hayden Schwieg, Timothy Williams, Kevin R |
| description | We propose a demand estimation method that allows for a large number of zerosale observations, rich unobserved heterogeneity, and endogenous prices. We do so by modeling small market sizes through Poisson arrivals. Each of these arriving consumers solves a standard discrete choice problem. We present a Bayesian IV estimation approach that addresses sampling error in product shares and scales well to rich data environments. The data requirements are traditional market-level data as well as a measure of market sizes or consumer arrivals. After presenting simulation studies, we demonstrate the method in an empirical application of air travel demand. |
| doi_str_mv | 10.3982/QE2147 |
| format | Article |
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| subjects | Air travel airline markets Airlines Bayesian analysis Bayesian methods Bias Consumers demand estimation Discrete choice Discrete choice modeling Econometrics Endogenous Estimates Market shares Price elasticity Prices Sales Sampling error Simulation Willingness to pay zero-sale observations |
| title | Demand estimation with infrequent purchases and small market sizes |
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