Demand estimation with infrequent purchases and small market sizes

• 成果类型: Article
• 署名作者: Hortacsu, Ali; Natan, Olivia R.; Parsley, Hayden; Schwieg, Timothy; Williams, Kevin R.
• 署名单位: University of Chicago; National Bureau of Economic Research; University of California System; University of California Los Angeles; University of Texas System; University of Texas Austin; University of Chicago; Yale University
• 刊物名称: QUANTITATIVE ECONOMICS
• ISSN/ISSBN: 1759-7323
• DOI: 10.3982/QE2147
• 发表日期: 2023
• 页码: 1251-1294
• 关键词: Discrete choice modeling; demand estimation; zero-sale observations; Bayesian methods; airline markets; C11; C18; L93

摘要

We propose a demand estimation method that allows for a large number of zero- sale 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.