ESTIMATION OF CENSORED LA/AIDS MODEL WITH ENDOGENOUS UNIT VALUES
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In this study, we develop and estimate a censored LA/AIDS model using household-level
purchase data. In addition to imposing non-negativitity constraints, we account for the
endogeneity of unit value. We address the non-negativity issue using an Amemiya-Tobin
approach, which imposes the adding-up condition on both observed and latent shares.
We address the endogeneity of unit value by estimating share equations and unit value
equations simultaneously. Given the need to evaluate high-order probability integrals, we
use a simulated probability method in the model estimation. This model is applied to
estimate and analyze a demand system featuring six fish and three meat commodities,
using Norwegian household data.