TY - JOUR
T1 - Estimating multiple-discrete choice models
T2 - An application to computerization returns
AU - Hendel, Igal
N1 - Funding Information:
Acknowledgements. I am grateful to Ariel Pakes, Zvi Griliches, Moshe Buchinsky and Steve Berry for their invaluable advice and to Manuel Trajtenberg who provided the motivation for this study and access to the data. Thanks to Eric Edmonds, Ariel Hendel, Bo Honore, and two referees for useful comments. Financial support from the Sloan Foundation Grant to the NBER and the Sloan Doctoral Dissertation Fellowship are gratefully acknowledged. The errors are all mine.
PY - 1999/4
Y1 - 1999/4
N2 - Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2-2% gain in the estimated user surplus.
AB - Buyers in many markets face multiple-discrete choices: they can purchase multiple-units as well as multiple-brands at the same time. This paper presents a multiple-discrete choice model for the analysis of differentiated products demand. Users maximize profits by choosing the number of units of each brand they purchase. I estimate the model using micro-level data on the demand for personal computers. I use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals. The estimated return on investment in personal computers is 92%. Moreover, a 10% increase in the performance-to-price ratio of microprocessors leads to a 2-2% gain in the estimated user surplus.
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U2 - 10.1111/1467-937X.00093
DO - 10.1111/1467-937X.00093
M3 - Article
AN - SCOPUS:0005231253
SN - 0034-6527
VL - 66
SP - 423
EP - 446
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 2
ER -