A simplified mixed logit demand model with an application to the simulation of entry

Given additional information on economic meaningful measures, such as price elasticity or margin, this paper proposes an alternative empirical approach to determine the parameters of a simplified ( aggregate) Mixed Logit Model. This empirical method is particularly useful when valid instruments are difficult to find. The model is applied to uncover the demand parameters and simulate the competitive and welfare effects of the introduction of new products in the ready-to-eat cereal industry in the U.S.