Hello everybody

I have the following excercise to estimate Demand allowing for heterogeneal preference shocks:

Supermarkets market

Time (m) = 5
Area (i) = 18
Branch for each Area (h) = 199. Adding the outside option 200
3 different firms
distance= distance to the city center
employees= number of the employees in the branch

Utility funtion of the customers:

U(ihm) = β1income(im) + β2Firm1(hm) + β3Firm2(hm) + β4employees(hm) + β5distancia(ih) + ε(ihm)

As you can note the U function doesn´t include price because one assumption is that every supermarket sell at the same price

I also have the variable Area Share(ihm), which represent the market share of the Branch(h) in the Area(i) for the period of time (m)



If someone have experience estimating that kind of models it would be really helpfull.

Thanks,
Manuel.