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

Steven Berry | Zendy; James Levinsohn | Zendy; Ariel Pakes | Zendy

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

Author(s) -

Steven Berry,

James Levinsohn,

Ariel Pakes

Publication year - 2004

Publication title -

journal of political economy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 21.034

H-Index - 186

eISSN - 1537-534X

pISSN - 0022-3808

DOI - 10.1086/379939

Subject(s) - macro , automotive industry , substitution (logic) , consumer demand , sample (material) , product differentiation , class (philosophy) , consumer choice , econometrics , economics , industrial organization , computer science , microeconomics , engineering , chemistry , chromatography , artificial intelligence , cournot competition , programming language , aerospace engineering

In this paper, we consider how rich sources of information on consumer choice can help to identify demand parameters in a widely used class of differentiated products demand models. Most important, we show how to use “second‐choice” data on automotive purchases to obtain good estimates of substitution patterns in the automobile industry. We use our estimates to make out‐of‐sample predictions about important recent changes in industry structure.

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