On your slide of SUPD, by 'with logit errors, new products do not crowd the original market,' do you mean that logit erorr always incorporate some external margin of the market (substitution from the outside good) as opposed to preserving the internal share of the market? Similar to what the "pure characteristics model" tried to address..?
On your slide of SUPD, by 'with logit errors, new products do not crowd the original market,' do you mean that logit erorr always incorporate some external margin of the market (substitution from the outside good) as opposed to preserving the internal share of the market? Similar to what the "pure characteristics model" tried to address..?
Yes, that's what I meant! Conditional on the observables, the substitution patterns are proportional across all goods.