Identification and Estimation of Demand Models with Endogenous Product Entry and Exit
25 Oct 2023
15:00 -16:00
Times are shown in local time.
Open to: Members of University of Cambridge
Room W2.02 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Economics and Policy seminar
Speaker: Dr Alessandro Iaria, University of Bristol
About the seminar topic
This paper deals with the endogeneity of firms’ entry and exit decisions in demand estimation. Product entry decisions lack a single crossing property in terms of demand unobservables, which causes the inconsistency of conventional methods dealing with selection. We present a novel and straightforward 2-step approach to estimate demand while addressing endogenous product entry.
In the first step, our method estimates a finite mixture model of product entry accommodating latent market types. In the second step, it estimates demand controlling for the propensity scores of all latent market types. We apply this approach to data from the airline industry.
Speaker bio
Alessandro Iaria is a senior lecturer in the Department of Economics at the University of Bristol. Alessandro does research on 2 main topics: (i) the economics of science and innovation, and (ii) empirical industrial organisation. On a first series of projects, Alessandro has been studying the path-breaking developments of the Natural Sciences in the 20th century, their impact on technological progress, and the evolution of gender gaps in academia since the 1900.
On a different line of research, he has been investigating several issues that commonly arise in the estimation of discrete choice models of demand and games, with applications to price discrimination in various industries.
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