Universal Instrumental Variables (UnIVs) to Identify Peer Effects in Product Markets
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Universal Instrumental Variables (UnIVs) help to address the endogeneity problem associated with the reflection problem in peer groups (i.e., disentangling the causal effect from a firm-specific treatment from a potentially latent variable that affects the entire peer group). The data help to causally identify peer effects in any product market classified by SIC codes. The instrumental variables have desirable properties, such as a (by econometrical construction) guaranteed exclusion restriction. Read more