TY  - SER
AU  - Fosgerau, Mogens
AU  -  de Palma, André
AU  -  Monardo, Julien
TI  - The Inverse Product Differentiation Logit Model
SN  - 1945-7669
PB  - American Economic Journal: Microeconomics
KW  -  Beverages
KW  -  Consumer Economics
KW  -  Discrete Regressors
KW  -  e-Commerce
KW  -  Retail and Wholesale Trade
KW  - Wine and Spirits
N2  - We introduce the inverse product differentiation logit (IPDL) model, a micro-founded inverse market share model for differentiated products that captures market segmentation according to one or more characteristics. The IPDL model generalizes the nested logit model to allow richer substitution patterns, including complementarity in demand, and can be estimated by linear instrumental variable regression with market-level data. Furthermore, we provide Monte Carlo experiments comparing the IPDL model to the workhorse empirical models of the literature. Lastly, we demonstrate the empirical performance of the IPDL model using a well-known dataset on the ready-to-eat cereal market
UR  - https://www.aeaweb.org/articles?id=10.1257/mic.20210066
ER  -