eprintid: 10113004 rev_number: 17 eprint_status: archive userid: 608 dir: disk0/10/11/30/04 datestamp: 2020-10-23 11:34:03 lastmod: 2021-11-11 23:41:20 status_changed: 2020-10-23 11:34:03 type: article metadata_visibility: show creators_name: Blundell, R title: Estimation of a Heterogeneous Demand Function with Berkson Errors ispublished: inpress divisions: UCL divisions: B03 divisions: C03 divisions: F24 note: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. abstract: Berkson errors are commonplace in empirical microeconomics. In consumer demand this form of measurement error occurs when the price an individual pays is measured by the (weighted) average price paid by individuals in a group (e.g., a county), rather than the true transaction price. We show the importance of Berkson errors for demand estimation with nonseparable unobserved heterogeneity. We develop a consistent estimator using external information on the true price distribution. Examining gasoline demand in the U.S., we document substantial within-market price variability. Accounting for Berkson errors is quantitatively important. Imposing the Slutsky shape constraint reduces sensitivity to Berkson errors. date: 2020 date_type: published official_url: https://doi.org/10.1162/rest_a_01018 oa_status: green full_text_type: other language: eng primo: open primo_central: open_green verified: verified_manual elements_id: 1823516 doi: 10.1162/rest_a_01018 lyricists_name: Blundell, Richard lyricists_id: RBLUN25 actors_name: Blundell, Richard actors_id: RBLUN25 actors_role: owner full_text_status: public publication: Review of Economics and Statistics citation: Blundell, R; (2020) Estimation of a Heterogeneous Demand Function with Berkson Errors. Review of Economics and Statistics 10.1162/rest_a_01018 <https://doi.org/10.1162/rest_a_01018>. (In press). Green open access document_url: https://discovery.ucl.ac.uk/id/eprint/10113004/1/berkson_paper_2020_07_12.pdf