{"ID":2824210,"CreatedAt":"2026-06-01T04:54:23.091178241Z","UpdatedAt":"2026-06-01T04:54:23.091178241Z","DeletedAt":null,"paper_url":"https://arxiv.org/abs/2512.23211","arxiv_id":"2512.23211","title":"Nonparametric Identification of Demand without Exogenous Product Characteristics","abstract":"We study identification of differentiated product demand from market-level data when product characteristics can be endogenous. Past work suggests nonparametric identification may be impossible: that is, in addition to standard price instruments, exogenous characteristic-based instruments are essentially necessary to identify sufficiently flexible demand models with standard index restrictions. We show, however, that price counterfactuals are nonparametrically identified using recentered instruments -- which combine exogenous price instruments with possibly endogenous product characteristics -- under a weaker index restriction and a new condition we term faithfulness. We argue that faithfulness, like the usual completeness condition for nonparametric instrumental variable identification, is best viewed as a technical requirement on the strength of identifying variation rather than a substantive economic or statistical restriction. We show the two conditions are closely related, though generally distinct. We conclude with several practical implications for the parametric estimation of demand counterfactuals.","short_abstract":"We study identification of differentiated product demand from market-level data when product characteristics can be endogenous. Past work suggests nonparametric identification may be impossible: that is, in addition to standard price instruments, exogenous characteristic-based instruments are essentially necessary to i...","url_abs":"https://arxiv.org/abs/2512.23211","url_pdf":"https://arxiv.org/pdf/2512.23211v2","authors":"[\"Kirill Borusyak\",\"Jiafeng Chen\",\"Peter Hull\",\"Lihua Lei\"]","published":"2025-12-29T05:19:05Z","proceeding":"econ.EM","tasks":"[\"econ.EM\",\"math.ST\",\"stat.ME\"]","methods":"[]","has_code":false}