Robust Firm Pricing with Panel Data
نویسندگان
چکیده
Firms often have imperfect information about demand for their products. We develop an integrated econometric and theoretical framework to model firm demand assessment and subsequent pricing decisions with limited information. We introduce a panel data discrete choice model whose realistic assumptions about consumer behavior deliver partially identified preferences and thus generates ambiguity in the firm pricing problem. We use the minimax regret criterion as a decision-making rule for firms facing this ambiguity. We illustrate the framework’s benefits relative to the most common discrete choice analysis approach through simulated and field data empirical examples. JEL CODES: C14, C44, L11, L13, L15
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