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DICE Research Seminar: “Elasticity and Curvature of Discrete Choice Demand Models “


Katja Seim (Yale University)

will give a talk on               

“Elasticity and Curvature of Discrete Choice Demand Models “

in the DICE research seminar.

Abstract: We study the determinants of cost pass-through in differentiated product markets. Random utility models of demand, such as mixed logit, are attractive because they place limited restrictions on customer substitution patterns. We show the shape of the distributions of customer preferences determines cost pass-through. Common functional form assumptions for these distributions lead to biased estimates of both pass-through and substitution. We offer a flexible and parsimonious unit-demand specification that accommodates both log-concave demands (incomplete pass-through) and log-convex demands (overshifted pass-through) up to CES demand. Instruments and estimation are straightforward, and Monte Carlo analysis validates our ability to recover the underlying demand curvature. Using automobile data, we find the bias from ex-ante shape restrictions is large. Flexibly estimating cost pass-through, therefore, has important implications for designing and evaluating trade policy.

You can find Katja’s website here: https://som.yale.edu/faculty-research/faculty-directory/katja-seim.

She will be available for individual meetings on Monday (July 8th) afternoon and Tuesday (July 9th). Giulia and Yihan will coordinate the schedule. Please use the following Google sheet if you want to reserve a slot: https://docs.google.com/spreadsheets/d/1-a4aLpgf7Lknu25by0q-j3af2W1J-giuDA6l7252E44/edit#gid=0



10.07.2024, 11:15 Uhr - 12:30 Uhr
Ort: room S3/4 in the Oeconomicum (building 24.31)