arXiv 28 Jan 2025 · Econometrics
arXiv:2501.17251 · PDF · DOI · OpenAlex · Extracted main text
We observe nominal price rigidity in tobacco markets across China. The monopolistic seller responds by adjusting product assortments, which remain unobserved by the analyst. We develop and estimate a logit demand model that incorporates assortment discrimination and nominal price rigidity. We find that consumers are significantly more responsive to price changes than conventional models predict. Simulated tax increases reveal that neglecting the role of endogenous assortments results in underestimations of the decline in higher-tier product sales, incorrect directional predictions of lower-tier product sales, and overestimation of tax revenue by more than 50%. Finally, we extend our methodology to settings with competition and random coefficient models.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Berry, S., J. Levinsohn, and A. Pakes (1995) Automobile prices in market equilibrium | 0.928 | 5 | 3 | 80% |
| 2 | Gao, S., R. Zheng, and T.-w. Hu (2012) Can increases in the cigarette tax rate be linked to cigarette retail prices? Solving mysteries related to the cigarette pricing… | 0.874 | 6 | 5 | 67% |
| 3 | Zheng, R (2018) Tobacco Tax and Tobacco Economy in China | 0.830 | 7 | 6 | 57% |
| 4 | Goodchild, M. and R. Zheng (2018) Early assessment of China’s 2015 tobacco tax increase | 0.811 | 4 | 2 | 100% |
| 5 | Hitsch, G. J., A. Hortaçsu, and X. Lin (2019) Prices and promotions in u.s. retail markets: Evidence from big data | 0.644 | 2 | 2 | 100% |
| 6 | Adams, B. and K. R. Williams (2019) Zone pricing in retail oligopoly | 0.644 | 2 | 2 | 100% |
| 7 | Aguiar, V. H. and N. Kashaev (2021) Identification and estimation of discrete choice models with unobserved choice sets | 0.644 | 2 | 2 | 100% |
| 8 | Bishop, J. A., L. Haiyong, and M. Qi (2007) Are Chinese smokers sensitive to price? | 0.644 | 2 | 2 | 100% |
| 9 | Chib, S. and K. Shimizu (2023) Scalable estimation of multinomial response models with uncertain consideration sets | 0.644 | 2 | 2 | 100% |
| 10 | Crawford, G. S., R. Griffith, A. Iaria, et al (2016) Demand estimation with unobserved choice set heterogeneity | 0.644 | 2 | 2 | 100% |
Showing the top 10 of 53 scored citations.
arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.
| Citing paper | Intensity | Mentions | Sections | |
|---|---|---|---|---|
| 1 | Identification and Estimation of Demand Models with Endogenous Product Entry and Exit | 0.405 | 1 | 1 |