MARC Record from Library of Congress

LEADER: 02442nam a22002897a 4500
001 2008610905
003 DLC
005 20080716095319.0
007 cr |||||||||||
008 080714s2008 mau sb 000 0 eng
010 $a 2008610905
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aKnittel, Christopher R.
245 10 $aEstimation of random coefficient demand models$h[electronic resource] :$bchallenges, difficulties and warnings /$cChristopher R. Knittel, Konstantinos Metaxoglou.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2008.
490 1 $aNBER working paper series ;$vworking paper 14080
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 7/14/2008.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Empirical exercises in economics frequently involve estimation of highly nonlinear models. The criterion function may not be globally concave or convex and exhibit many local extrema. Choosing among these local extrema is non-trivial for a variety of reasons. In this paper, we analyze the sensitivity of parameter estimates, and most importantly of economic variables of interest, to both starting values and the type of non-linear optimization algorithm employed. We focus on a class of demand models for differentiated products that have been used extensively in industrial organization, and more recently in public and labor. We find that convergence may occur at a number of local extrema, at saddles and in regions of the objective function where the first-order conditions are not satisfied. We find own- and cross-price elasticities that differ by a factor of over 100 depending on the set of candidate parameter estimates. In an attempt to evaluate the welfare effects of a change in an industry's structure, we undertake a hypothetical merger exercise. Our calculations indicate consumer welfare effects can vary between positive values to negative seventy billion dollars depending on the set of parameter estimates used"--National Bureau of Economic Research web site.
700 1 $aMetaxoglou, Konstantinos.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 14080.
856 40 $uhttp://papers.nber.org/papers/w14080