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Reinterpreting demand estimation

Jiafeng Chen

arXiv 30 Mar 2025 · Econometrics

arXiv:2503.23524 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper bridges the demand estimation and causal inference literatures by interpreting nonparametric structural assumptions as restrictions on counterfactual outcomes. It offers nontrivial and equivalent restatements of key demand estimation assumptions in the Neyman-Rubin potential outcomes model, for both settings with market-level data (Berry and Haile, 2014) and settings with demographic-specific market shares (Berry and Haile, 2024). The reformulation highlights a latent homogeneity assumption underlying structural demand models: The relationship between counterfactual outcomes is assumed to be identical across markets. This assumption is strong, but necessary for identification of market-level counterfactuals. Viewing structural demand models as misspecified but approximately correct reveals a tradeoff between specification flexibility and robustness to latent homogeneity.

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Most heavily cited references

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.

ReferenceIntensityMentionsSectionsMain text
1Berry, S. T. and Haile, P. A (2014) Identification in differentiated products markets using market level data1.000224100%
2–- and –- (2024) Nonparametric identification of differentiated products demand using micro data0.95315587%
3–-, Levinsohn, J. and Pakes, A (1995) Automobile prices in market equilibrium0.87462100%
4Andrews, I., Barahona, N., Gentzkow, M., Rambachan, A. and Shapiro,… (2025) a)0.8434375%
5Newey, W. K. and Powell, J. L (2003) Instrumental variable estimation of nonparametric models0.84333100%
6Vytlacil, E (2002) Independence, monotonicity, and latent index models: An equivalence result0.81142100%
7–-, Levinsohn, J. and Pakes, A (2004) Differentiated products demand systems from a combination of micro and macro data: The new car market0.7373367%
8–- and –- (2021) Foundations of demand estimation0.73732100%
9Borusyak, K., Bravo, M. C. and Hull, P (2025) a)0.73732100%
10Tebaldi, P., Torgovitsky, A. and Yang, H (2023) Nonparametric estimates of demand in the california health insurance exchange0.64441100%

Showing the top 10 of 46 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Nonparametric Identification of Demand without Exogenous Product Characteristics1.00053