Suppose you are attempting to estimate the model Qit = Bo + B Advertising it +...
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Suppose you are attempting to estimate the model Qit = Bo + B₁ Advertising it + ai + Eit to identify the effectiveness of marketing practices of firms, where Qit denotes units sold of one product in stores are indexed by i and weeks t, and Advertising it is advertising expenditures of that store in that week. You have observations for over 200 stores for a period of time that spans 180 weeks. To ensure your estimate of B₁ is consistent you must control for the store-level time invariant heterogeneity (a¡). a. Suppose you were willing to assume that a; was independent of Advertising it. What would be the most efficient way to estimate the model? Discuss why. b. Suppose you were unwilling to assume that a; and Advertisingit are independent. Describe two methods to estimate the model. Comment on what might be the advantages/disadvantages of using one of these two approaches. Suppose you are attempting to estimate the model Qit = Bo + B₁ Advertising it + ai + Eit to identify the effectiveness of marketing practices of firms, where Qit denotes units sold of one product in stores are indexed by i and weeks t, and Advertising it is advertising expenditures of that store in that week. You have observations for over 200 stores for a period of time that spans 180 weeks. To ensure your estimate of B₁ is consistent you must control for the store-level time invariant heterogeneity (a¡). a. Suppose you were willing to assume that a; was independent of Advertising it. What would be the most efficient way to estimate the model? Discuss why. b. Suppose you were unwilling to assume that a; and Advertisingit are independent. Describe two methods to estimate the model. Comment on what might be the advantages/disadvantages of using one of these two approaches.
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Related Book For
Project Management Achieving Competitive Advantage
ISBN: 978-0133798074
4th edition
Authors: Jeffrey K. Pinto
Posted Date:
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