Empirical Models of Consumer Behavior
37 Pages Posted: 24 Oct 2010
Date Written: October 10, 2010
Models of consumer behavior play a key role in modern empirical Industrial Organization. In this paper, I survey some of the models used in this literature. In particular, I discuss two commonly used demand systems: multi-stage budgeting approaches and discrete choice models. I motivate their use and highlight some key modeling assumptions. I next briefly discuss key issues of estimation, and conclude by summarizing some extensions.
Keywords: Industrial Organization, Demand Estimation, Differentiated Products, Almost Ideal Demand System, Discrete Choice
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