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Empirical Economics

, 34:537 | Cite as

GMM estimation of a structural demand model for yogurt and the effects of the introduction of new brands

  • Marina Di GiacomoEmail author
Original Paper

Abstract

The demand structure for yogurt is assumed to be properly described by a one level nested logit model that is applied to aggregate market data. Given the presence of endogenous regressors, suitably lagged endogenous variables (Arellano and Bover in J Econom 68:29–51, 1995; Blundell and Bond in J Econom 87:115–143, 1998) are proposed as instrumental variables. The validity of this set of instruments is discussed and price elasticities and marginal costs are recovered from the demand estimates. Total welfare gains associated to the introduction of two new brands by the same manufacturer are finally computed. Prices and profits decreased and total welfare increased.

Keywords

Nested logit GMM Yogurt Instrumental variables New products 

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Copyright information

© Springer Verlag 2007

Authors and Affiliations

  1. 1.Facoltà di EconomiaUniversity of TurinTorinoItaly

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