Estimate a Demand Model From Aggregate Market Shares

Source: R/estimate_demand.R

Estimate a Demand Model From Aggregate Market Shares

estimate_demand(df, market_ids, product_id, market_share, outside_share,
  exog_charac, price, nest_shares = NULL, instruments = NULL,
  productFE = TRUE, marketFE = "both", supply_side = FALSE)

Arguments

df	Dataframe to containing data to be used in estimation
market_ids	List of variables contaning market identifiers
product_id	Variable containing product identifier
market_share	Variable containing product market shares, as a character string
outside_share	Variable outside shares, as a character string
exog_charac	Vector of exogenous product characteristic variables, as a character vector
price	Variable containing market price, as a character string
nest_shares	Vector of nest share variables, as a character vector
instruments	Vector of instrument names, as a character vector - NOT CURRENTLY IMPLEMENTED
productFE	Logical variable, TRUE leads to estimation with product fixed effects
marketFE	Character string of which market fixed effects to contain, takes value "both", "geog" or "time"
supply_side	Logical variable, TRUE leads to estimation with the constraints from a Bertrand-Nash Oligopoly Model - NOT CURRENTLY IMPLEMENTED

Value

Returns an object of class "lm" when instruments = FALSE

Examples

# Regression Without Nests
mkts <- create_markets(geog_id = "market_id", time_id = "year")
price_var     <- c("price_euro")
exog_var      <- c("kilowatts", "fueleff_avg", "width", "height", "domestic")
mkt_share     <- c("mkt_share")
outside_share <- c("outside_share")
## Create Shares
df   <- mkt_share_from_sales(eurocars,
                               quantity   = 'qty_sold',
                               population = 'population')
df2  <- create_shares(df, market_id  = mkts,
                          mkt_share  = 'mkt_share')
#> [1] "Creating Outside Share..."
#> [1] "Done!"
## Run regression
reg <- estimate_demand(df             = df2,
                        market_ids    = mkts,
                        product_id    = 'model_id2',
                        market_share  = mkt_share,
                        outside_share = outside_share,
                        exog_charac   = exog_var,
                        price         = price_var,
                        marketFE      = "both",
                        productFE     = TRUE)
#> [1] "Estimation With Geographic and Time Fixed Effects"
#> [1] "Estimation With Product Fixed Effects"

# Regression With One Level Nest
mkts <- create_markets(geog_id = "market_id", time_id = "year")
price_var     <- c("price_euro")
exog_var      <- c("kilowatts", "fueleff_avg", "width", "height", "domestic")
mkt_share     <- c("mkt_share")
outside_share <- c("outside_share")
## Create Shares
df   <- mkt_share_from_sales(eurocars,
                               quantity   = 'qty_sold',
                               population = 'population')
df2  <- create_shares(df, market_id  = mkts,
                          mkt_share  = 'mkt_share',
                          nest_id    = 'class_id')
#> [1] "Creating Outside Share..."
#> [1] "Done!"
#> [1] "Working with one layer of nests..."
#> [1] "Nest ID is: class_id"
## Run regression
reg <- estimate_demand(df             = df2,
                        market_ids    = mkts,
                        product_id    = 'model_id2',
                        market_share  = mkt_share,
                        outside_share = outside_share,
                        exog_charac   = exog_var,
                        price         = price_var,
                        nest_shares   = c("within_nest"),
                        marketFE      = "both",
                        productFE     = TRUE)
#> [1] "Estimation With Geographic and Time Fixed Effects"
#> [1] "Estimation With Product Fixed Effects"

# Regression With Two Level Nest
mkts <- create_markets(geog_id = "market_id", time_id = "year")
price_var     <- c("price_euro")
exog_var      <- c("kilowatts", "fueleff_avg", "width", "height", "domestic")
mkt_share     <- c("mkt_share")
outside_share <- c("outside_share")
## Create Shares
df   <- mkt_share_from_sales(eurocars,
                               quantity   = 'qty_sold',
                               population = 'population')
df2  <- create_shares(df, market_id  = mkts,
                          mkt_share  = 'mkt_share',
                          nest_id    = 'class_id',
                          subnest_id = 'domestic')
#> [1] "Creating Outside Share..."
#> [1] "Done!"
#> [1] "Working with two layers of nests..."
#> [1] "Nest ID is: class_id"
#> [1] "Sub-Nest ID is: domestic"
## Run regression
reg <- estimate_demand(df             = df2,
                        market_ids    = mkts,
                        product_id    = 'model_id2',
                        market_share  = mkt_share,
                        outside_share = outside_share,
                        exog_charac   = exog_var,
                        price         = price_var,
                        nest_shares   = c("within_nest", "within_subnest"),
                        marketFE      = "both",
                        productFE     = TRUE)
#> [1] "Estimation With Geographic and Time Fixed Effects"
#> [1] "Estimation With Product Fixed Effects"