Tao Sun
Ph.D. Candidate in Economics
The University of Melbourne
Research Interests
Applied Econometrics, Bayesian Inference, Industrial Organization, Health Economics
(Choice Modeling, Demand Estimation, Mixture Models, Bayesian Factor Analysis, Drug Use, Sin Tax)
Job Market Paper
Bundle Demand Model for Panel Data with Endogenous Regressors
Abstract: I propose a Bayesian factor-augmented bundle demand model for panel data, designed to estimate demand as well as the substitutability and complementarity of multiple goods in the presence of endogenous regressors. A factor structure is utilized to model error correlations caused by taste correlation and endogeneity, allowing for time-varying unobserved tastes and utility-price confounders. To demonstrate the merits of the proposed framework, the model is applied to simulated data as well as to estimate the demand for beer and malt beverage in grocery stores. The empirical illustration reveals evidence of price endogeneity and time variation in unobserved tastes and utility-price confounders. Additionally, it suggests that beer products are generally independent in demand, as implied by insignificant cross-price elasticities. The study also confirms a preference for variety, indicated by the increase in bundle effects with family size.
