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st: Interaction terms in a nested logit demand model


From   axy@gmx.ch
To   statalist@hsphsun2.harvard.edu
Subject   st: Interaction terms in a nested logit demand model
Date   Thu, 21 Oct 2010 11:16:19 +0200

Dear Statalisters,

I'm estimating a nested logit demand model (Berry, 1994) with a panel dataset of aggregated data by means of the xtivreg, fe command. The dataset contains quarterly sales and price data and several other product characteristics.

A main characteristic of the products in the dataset is the belonging to one of three product groups, so I grouped them according to the respective product group. Besides product characteristics I included a variable that is equal for all products at the same time but still has an impact on demand, like temperature. However, I would like to figure out if there is a different impact of temperature on the demand for the three groups. So I added three interaction terms, the product of a group-belonging dummy and temperature.

Is that a feasible method to figure out if there is a different impact of a variable that is not a product characteristic? Or does anyone know a reference?

Thanks a lot in advance!

Thomas
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