Minimum Distance Estimation of Search Costs Using Price Distribution
Bibliographic Data
| ID | 19419875 |
|---|---|
| Authors | Fabio Sanches (0009-0003-2660-1824, Pontifícia Universidade Católica do Rio de Janeiro), Daniel Silva Junior (0000-0003-0909-0703, City, University of London), Daniel Pereira Silva (0000-0002-8442-6978, University of Surrey, corresponding author), Sorawoot Srisuma (0000-0002-4686-474X, University of Surrey) |
| Year | 2018 |
| Volume | 36 |
| Issue | 4 |
| Pages | 658-671 |
| Publication date | 2018-10-02 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Business and Economic Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0735-0015 • E-ISSN: 1537-2707 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/07350015.2016.1247003 |
| OpenAlex | W2270329675 |
| Language | EN |
| Citations received | 1 |
| References cited | 26 |
It has been shown that equilibrium restrictions in a search model can be used to identify quantiles of the search cost distribution from observedprices alone. These quantiles can be difficult to estimate in practice. This article uses a minimum distance approach to estimate them that is easy to compute. A version of our estimator is a solution to a nonlinear least-square problem that can be straightforwardly programmed on softwares such as STATA. We show our estimator is consistent and has an asymptotic normal distribution. Its distribution can be consistently estimated by a bootstrap. Our estimator can be used to estimate the cost distribution nonparametrically on a larger support when prices from heterogenous markets are available. We propose a two-step sieve estimator for that case. The first step estimates quantiles from each market. They are used in the second step as generated variables to perform nonparametric sieve estimation. We derive the uniform rate of convergence of the sieve estimator that can be used to quantify the errors incurred from interpolating data across markets. To illustrate we use online bookmaking odds for English football leagues’ matches (as prices) and find evidence that suggests search costs for consumers have fallen following a change in the British law that allows gambling operators to advertise more widely.
Econometrics · Estimator · Mathematical optimization · Nonparametric statistics · Odds · Quantile · Statistics · Auction Theory and Applications · Computer Science · Consumer Market Behavior and Pricing · Economics of Agriculture and Food Markets · Mathematics
| Citations per year | 0.17 |
|---|---|
| Citation span | 2020 - 2020 (1) |
| Highly cited | No |