A paper by these three economists finds equilibria for the U.S. auto industry using a model with idiosyncratic heterogeneity based on a type I extreme value distribution. For 10 points each:
[10h] Name these three economists or the abbreviation for their collaboration. They name a common process in industrial organization for estimating demand using a random-coefficient discrete-choice model.
ANSWER: Berry AND Levinsohn AND Pakes [accept answers in order; accept BLP; accept Steven T. Berry in place of “Berry”; accept James A. Levinsohn or Jim Levinsohn in place of "Levinsohn"; accept Ariél Pakes in place of “Pakes”; prompt on partial answers]
[10m] To handle price exogeneity, BLP estimation uses this type of variable, like a cost shifter. This type of variable, often used in causal inference, is correlated with the explanatory variable but satisfies the exclusion restriction.
ANSWER: instrumental variable [or instrument; or IV]
[10e] One way to improve demand estimation using BLP is by adding moments denoting this economic concept, which is also represented by a curve that intersects the demand curve at equilibrium.
ANSWER: supply
<Benjamin McAvoy-Bickford, Social Science>