Article ID Journal Published Year Pages File Type
5058527 Economics Letters 2015 4 Pages PDF
Abstract

•I introduce a model to estimate demand with only one firm's prices.•Consumers first choose from symmetric retailers and then choose quantity.•Demand yields cubic pricing equation that identifies key structural parameters.•Demand parameters are estimated precisely, but cost terms are not.•Most plausible disturbance misspecification conservatively biases estimates.

Extending the circular-city model, I derive a pricing equation that identifies key structural parameters from one firm's data. Simulations indicate demand shifters and rotators can be distinguished, cost parameters are imprecise, and the likeliest specification error biases estimates toward zero.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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